mbrx20231231_10k.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 2023

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

For the transition period from to

Commission File Number: 001-37758

Moleculin Biotech, Inc.

(Exact name of registrant as specified in its charter)

(State or Other Jurisdiction of (I.R.S. Employer

Incorporation or Organization) Identification Number)

5300 Memorial Drive, Suite 950

Houston, Texas77007

(713) 300-5160

(Address of Principal Executive Offices, Zip Code and Registrant's Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol (s) Name of Each exchange on which registered

Common Stock, par value $0.001 per share MBRX Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Accelerated filer ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the registrant’s voting equity held by non-affiliates of the registrant, computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter, was $16 million. In determining the market value of the voting equity held by non-affiliates, securities of the registrant beneficially owned by directors, officers and 10% or greater shareholders of the registrant have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of shares of the registrant’s common stock outstanding as of March 14, 2024 was 2,227,516.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of this registrant’s definitive proxy statement for its 2024 Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after the end of the registrant’s fiscal year are incorporated herein by reference in Part III of this Annual Report on Form 10-K.

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Moleculin Biotech, Inc.

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PART I

Item 1. Business 3

Item 1A. Risk Factors 27

Item 1B. Unresolved Staff Comments 47

Item 1C. Cybersecurity 48

Item 2. Properties 49

Item 3. Legal Proceedings 49

Item 4. Mine Safety Disclosure 49

PART II

Item 6. [Reserved] 50

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56

Item 8. Financial Statements and Supplementary Data 56

Item 9A. Controls and Procedures 57

Item 9B. Other Information 57

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 57

PART III

Item 10. Directors, Executive Officers and Corporate Governance 58

Item 11. Executive Compensation 58

Item 14. Principal Accountant Fees and Services 58

PART IV

Item 15. Exhibits and Financial Statement Schedules 58

Signatures 62

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Moleculin Biotech, Inc.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Securities and Exchange Commission, referred to herein as the SEC, encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Certain statements that we may make from time to time, including, without limitation, statements contained in this report constitute “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

We make forward-looking statements under the “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this report. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “would,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under “Risk Factors.”

While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this report describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very highly regulated, competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations, and we do not intend to do so.

Forward-looking statements include, but are not limited to, statements about:

• Our ability to source our drug products at reasonable prices;

• Potential efficacy of our drug candidates;

• Our ability to commercialize our drug candidates;

• Market acceptance of our drug candidates;

• Competition from existing therapies or new therapies that may emerge;

• Potential product liability claims;

• Our ability to adequately support future growth; and

We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-K in the case of forward-looking statements contained in this Form 10-K.

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PART I

References in this Annual Report on Form 10-K to “MBI”, "Moleculin" or “the Company”, “we”, “our” and “us” are used herein to refer to Moleculin Biotech, Inc.

ITEM 1. BUSINESS

BUSINESS

Our Business Summary

We are a clinical stage pharmaceutical company with a growing pipeline, including Phase 2 clinical programs for hard-to-treat cancers and viruses. We have three core technologies, each of which have had one or more drugs successfully complete a Phase 1 clinical trial, based substantially on discoveries made at and licensed from the University of Texas MD Anderson Cancer Center (MD Anderson) in Houston, Texas. Three of our six drug candidates have shown human activity in clinical trials and are currently or have been in Phase 1B/2 or Phase 2 clinical trials. Since our inception, our drugs have completed, are currently in, or have been permitted to proceed in thirteen clinical trials. Annamycin is our lead molecule and is in three Phase 1B/2 clinical trials - one for treating Acute Myeloid Leukemia (AML) and two for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS).

One of our core management beliefs is that anthracyclines represent the most important treatment for AML and Advanced STS, and we believe Annamycin may, for the first time ever, allow a majority of these patients to benefit from this treatment. This belief leads us to currently focus mainly on the development of Annamycin.

Our Core Technologies

Our core technologies consist of the following programs:

a) Annamycin or L-Annamycin is a “next generation” anthracycline (one of the most common classes of chemotherapy), designed to be different than currently approved anthracyclines, which are limited in utility because of cardiotoxicity risks and their susceptibility to multidrug resistance mechanisms. Annamycin was designed to avoid multidrug resistance and to be non-cardiotoxic and has shown no cardiotoxicity in subjects treated in clinical trials to date. Furthermore, we have demonstrated safe dosing beyond the dose limitations imposed by regulatory authorities upon currently prescribed anthracyclines due to their inherent cardiotoxicity. Annamycin is demonstrating efficacy in two of its Phase 1B/2 trials as described further below in subjects with AML and Advanced STS. We believe that Annamycin has potential to fill an unmet need as a second line therapy (2nd line or 2L) in AML and potentially as first line therapy in Advanced STS.

As part of our Annamycin clinical trials, we have engaged an independent expert in assessing cardiotoxicity associated with chemotherapy at the Cleveland Clinic (Expert or Independent Expert). The data made available to the Expert includes left ventricular ejection fraction (LVEF) as determined by echocardiograms, and ECHO strain imaging, as well as Troponin levels (a biochemical marker of acute heart damage). “ECHO strain imaging” is a method in echocardiography (medical ultrasound) for measuring regional or global deformation (contraction or beating) of the myocardium (heart muscle). By strain rate imaging, the simultaneous function of different regions can be displayed and measured. Cardiac health biomarkers such as blood Troponin levels are considered an indicator of potential long-term heart damage. The Expert has issued and will continue to issue periodic reports as additional data are provided to him in batches of subject data. Such data include some data which are preliminary and subject to change. In our discussions regarding the lack of Annamycin's cardiotoxicity, we rely on the Expert's assessment.

Annamycin benefits from a promising advancement in lipid enabled drug delivery developed in collaboration with and exclusively licensed from MD Anderson. The unique patent-pending lipid composition allows us to combine a new concept in chemotherapeutic agents within a lipid structure that helps target the delivery of the payload and reduce the potential for toxicity. In the case of Annamycin, our unique use of lipid technology enables improved tissue/organ distribution, and as demonstrated in multiple clinical trials, dramatically reduced toxicity, including cardiotoxicity.

b) Our WP1066 Portfolio includes WP1066, WP1193 and WP1220, three of several Immune/Transcription Modulators in the portfolio designed to inhibit p-STAT3 (phosphorylated signal transducer and activator of transcription) among other transcription factors associated with tumor activity. These also stimulate a natural immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs). WP1066, in oral formulation, has been in two clinical trials, including compassionate use cases. WP1066 and WP1193 are being tested in preclinical programs in intravenous (IV) formulations. WP1066 and WP1220 have been in clinical trials in a topical formulation. WP1066 and WP1220 have both independently successfully completed Phase 1 clinical trials and have demonstrated efficacy as described further below.

c) Our WP1122 Portfolio contains compounds (including WP1122, WP1096, and WP1097) designed to exploit the potential uses of inhibitors of glycolysis such as 2-deoxy-D-glucose (2-DG). We believe such compounds may provide an opportunity to cut off the fuel supply of tumors by taking advantage of their high degree of dependence on glucose in comparison to healthy cells, as well as viruses that also depend upon glycolysis and glycosylation to infect and replicate. WP1122 has completed a Phase 1 clinical study, successfully establishing a Recommended Phase 2 Dose or RP2D.

Our Focus

We are focused on internally funded (“internally” and “externally” funded trials are defined in the Funding Strategy section below) development of:

1) Annamycin in combination with Cytarabine (also known as Ara-C, the combination with Annamycin of which is referred to as AnnAraC) for the treatment of AML.

2) Annamycin for the treatment of STS metastasized to the lungs.

3) A better formulation for delivery of a molecule from the WP1066 portfolio to possibly further support future externally funded oncology clinical trials. Such a formulation will require additional preclinical work prior to a clinical trial.

We have established an RP2D for WP1122 to potentially enable future externally funded oncology and virology trials. Beyond this, we support development of our core technologies through several externally funded clinical trials and primarily externally funded non-clinical research, with the potential for further studies in the future.

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Our Clinical Trials

We are currently conducting three Phase 1B/2 trials with Annamycin, two internally funded and one mainly externally funded. One additional externally funded Phase 1B/2 clinical trial with WP1066 in combination with radiation is planned to begin in 2024. In terms of developing preclinical data, we conduct research utilizing our own employees, as well as outside consultants, in our own lab, as well as contracted facilities and we sponsor research at MD Anderson, the University of Texas Medical Branch (UTMB), and the University of Warsaw to expand the science of our core technologies and to identify possible combinations with other approved drugs. We have a National Institutes of Health (NIH) funded preclinical study with WP1096 (from the WP1122 portfolio) for the treatment of the Tacaribe Arenavirus.

As summarized below, we and our external investigators have multiple active INDs/CTAs (Investigational New Drug authorization in the US or Clinical Trial Authorization in Europe). Under these INDs/CTAs, we have under development, approved, have in progress, or have completed thirteen internally and externally funded clinical trials. Additionally, we are anticipating advancing Annamycin in combination with Cytarabine for the treatment of AML in a Phase 2B/3 clinical trial beginning in late 2024 or early 2025. Depending on when MB-107 (our Phase 1B/2 clinical study with Annamycin as a monotherapy treating soft tissue sarcoma pulmonary metastases) concludes, we may see additional partially or fully externally funded clinical research with Annamycin for the treatment of advanced STS. Below in Table 1 we are summarizing all of the thirteen clinical trials concluded, in progress, or approved/ allowed by the FDA or its European equivalent. See the discussion following the Table 1 for more detailed information, especially on safety and human activity.

Notes for Table 1: 1) In MB-104 MLFS means "morphological leukemia-free state"; 2) In MB-105 we consider complete responses (CR) or complete response with incomplete recovery of the bone marrow (CRi) as where the bone marrow aspirate (BMAs) show leukemic blasts of less than 5%; 3) This is a summary of the detailed clinical discussion below and does not include compassionate use/right-to-try usage of our drug candidates; 4) Complete Response Composite (CRc) includes CRs and CRis; 5) Overall Response Rate (ORR) includes CRc and Partial Response (PR); 6) “Met safety endpoints” means that no drug-related serious and unexpected adverse events occurred as defined in the trial protocol 7) All data presented are preliminary unless a CSR or an investigator's final report has been issued for the trial referenced - specifically the data for MB-106 and MB-107 are preliminary and subject to change; 8) With regard to safety and human activity summaries please see the detailed discussion below; 9) MB-106 Phase 1 included “all-comers” or subjects with unlimited lines of prior therapy while Phase 2 included only subjects as 1st thru 3rd line of therapy, and 10) MB-107 Phase 2 has no ongoing treatment active and is following nine of fifteen subjects for overall survival (OS).

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In the US and Europe, since our inception, we or independent investigators have approval to begin, are currently conducting or have completed thirteen internally or externally funded clinical trials for four of our drug candidates – Annamycin, WP1066, WP1220, and WP1122, as listed above. All of the clinical trials are or were in the Phase 1 or 2 stage. Starting in 2021 through 2023, there have been eight "right-to-try" (or their foreign equivalent) uses of Annamycin and WP1066.

Our clinical trials focused on Annamycin in 2023 with two internally funded and one externally funded Phase 1B/2 clinical trials. We concluded recruitment and treatment in the MB-107 Phase 1B/2 all comers clinical trial using Annamycin as a single agent for the treatment of STS lung mets during 2023. In this trial we are still monitoring progression free survival (PFS) and overall survival (OS) as we move into 2024. In our MB-106 Phase 1B/2 all-comers (see discussion below) clinical trial using Annamycin in combination with Cytarabine for the treatment of AML, we concluded recruitment and treatment as 2nd line therapy on of January 31, 2024, and are continuing recruitment where treatment is either 1st line (Poland only) or 3rd line (Poland and Italy) with 20 subjects recruited thus far out of a planned maximum of 28 subjects. In using the term "all-comers" for this trial, we did not limit the number of prior therapies for subjects entering the trial in the Phase 1 portion of MB-106. In the Phase 2 portion we did limit the number of prior therapies to two. For subjects with one prior therapy, we plan on utilizing the 2nd line data for an end of Phase 2 meeting with the FDA in the first half of 2024. Additionally, recruiting and treatment continue for the externally funded Phase 1B/2 clinical trial studying an alternative dosing schedule of Annamycin for the treatment of STS lung mets in Poland, which is discussed further below. All of these Phase 1B/2 clinical trials are open label, so we periodically announce safety and efficacy data.

In February 2023, the externally funded Phase 1 clinical trial with WP1066 for the treatment of pediatric brain tumors concluded. We expect one externally funded Phase 1B/2 clinical trial for WP1066 in combination with radiation for the treatment of GBM and other brain tumors in 2024. One more pediatric clinical trial may occur in the future, subject to the results of the other two possible clinical trials.

Human Activity Shown in Our Clinical Trials

The following data regarding human activity are all from our studies. All data are preliminary and subject to change, unless a clinical study report (CSR) has been published or the investigator-initiated study has concluded and issued its annual report. “Right-to-try” data are preliminary until published. Specifically, the data from MB-106 and MB-107 are preliminary and subject to change. Such activity may or may not be repeated in future clinical trials, including potentially pivotal and/or confirmatory clinical trials. While we believe such data are encouraging, the FDA or its foreign counterpart will ultimately determine if such data and future data are individually conclusive and support future clinical trials or approval.

Three of our drug candidates have shown activity in humans to date.

• Annamycin has shown human activity in AML and STS lung mets as follows:

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• WP1066 has shown the following human activity:

• WP1220 (part of the WP1066 portfolio) has shown the following activity:

Our Drug Candidate Programs

Annamycin Program

Overview

One of our core management beliefs is that anthracyclines represent the most important treatment for AML and Advanced STS, and we believe Annamycin may allow, for the first time ever, a majority of these patients to benefit from this treatment. This belief leads us to currently focus mainly on the development of Annamycin.

To further explain this, we consider Annamycin to be a "next generation" anthracycline, unlike any currently approved anthracyclines, as it is designed to avoid multidrug resistance mechanisms and cardiotoxicity, recognizing that the efficacy of all currently approved anthracyclines is limited by both multidrug resistance and cardiotoxicity. Our preclinical studies and clinical trials support this intended design. The lack of cardiotoxicity and the potential for efficacy of Annamycin have been demonstrated in 82 subjects treated to date. The efficacy data have been generated, mainly in 2023. To that end, we believe that Annamycin has potential to fill an unmet need as a second line therapy (2nd line) in AML and potentially as a first line therapy (1st line) in Advanced STS.

The FDA granted ODD to Annamycin for the treatment of AML and for soft tissue sarcoma patients, which means the agency believes we have established a medically plausible basis for using the drug for those indications. The FDA also granted Fast Track-Designation (FTD) for Annamycin for both the treatment of AML and Soft Tissue Sarcoma. A drug that receives Fast Track-Designation (FTD) is eligible for some or all of the following:

The Importance ofLower Cardiotoxicity and Multi-Drug Resistance for 2nd Line Therapy

Chemotherapy continues to be a cornerstone of cancer therapy. Despite the progress made with immunotherapy and precision medicine, the first-line treatment for many cancers continues to include chemotherapy. In part, because of the emphasis placed on alternatives to chemotherapy, we believe that not enough has been done to improve chemotherapeutic agents to make them safer, especially with regard to cardiotoxicity (damage to the heart), and more effective. Anthracyclines are a class of chemotherapy drugs designed to destroy the DNA (by creating iron-mediated free oxygen radicals, damaging the DNA and cell membranes, and inhibiting topoisomerase II) of rapidly reproducing cancer cells. Acute leukemia is one of a number of cancers that are usually treated with anthracyclines in "fit" patients. In the case of acute leukemia, anthracyclines are typically used in “induction therapy,” where the goal is often to induce sufficient remission of patients’ blood-born tumor cells to allow for a potentially curative bone marrow transplant.

Two key factors limit the safety and effectiveness of anthracyclines: cardiotoxicity and multidrug resistance. We believe Annamycin may significantly reduce the impact of these two factors. If early clinical data of efficacy are borne out in subsequent clinical trials, of which there can be no assurance, Annamycin may ultimately provide clinically meaningful benefits over currently approved anthracyclines in treating certain cancers, especially as a 2nd line therapy.

The potential for cardiotoxicity in pediatric leukemia patients, whose life spans can be severely shortened by the induction therapy intended to cure them of acute leukemia, represents a significant risk. In the animal model recommended by the FDA as an indicator of human cardiotoxicity, the non-liposomal (free) form of Annamycin has been shown to be significantly less likely than doxorubicin to create heart lesions in mice, and the liposomal formulation (L-Annamycin) has been shown in these same models to further reduce cardiotoxicity. If this same characteristic continues to be shown in humans, it may allow Annamycin to be used more aggressively to help patients achieve remission. This would be especially valuable in the case of pediatric acute leukemia (both AML and ALL) because of the potential impact of cardiotoxicity on long-term survival.

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In addition, the effectiveness of currently approved anthracyclines is limited by their propensity for succumbing to “multidrug resistance.” This can occur where, as a natural defense mechanism, transmembrane proteins acting as transporters (one type of which is referred to as a “P-glycoprotein pump” or an “ABCB1 transporter”; otherwise referred to as “MDR1 mechanisms”) develop on the outer surface of cells to expel perceived threats like anthracyclines. In many instances, the likelihood of cardiotoxicity (and other serious side effects) prevents increasing the dosing of current therapies in order to overcome multidrug resistance. As a result, most patients cannot receive current anthracyclines in doses that are adequate to produce lasting remission and thereby qualify for a bone marrow transplant. A laboratory study has suggested that Annamycin may resist being expelled by P-glycoprotein pumps and similar multidrug resistance transporters, which may mean the drug circumvents multidrug resistance. Although significant further study is necessary, this characteristic has been shown in pre-clinical testing to allow for higher drug uptake in diseased cells, which we believe could allow for more effective induction therapy with less risk to the patient, especially in relapsed patients. We believe that the encouraging preliminary efficacy being demonstrated in our clinical trials in 2nd line AML therapy may, in part, be the result of Annamycin's ability to avoid MDR1 mechanisms.

Annamycin in preclinical studies has shown a lack of cardiotoxicity and this also has been shown in our clinical trials to date, as reported by our Expert. Clinical data where a CSR or its equivalent has not been published are considered preliminary and subject to change. Our Expert has issued and will continue to issue periodic reports as additional data are provided in batches of subject data.

To date, we have received a several independent assessments for the absence of cardiotoxicity in subjects treated with Annamycin. We now have independent assessments covering 63 subjects that have been treated with Annamycin in four different clinical trials in the U.S. and Europe with no evidence of cardiotoxicity. To date, 62 of all 82 subjects treated (which includes the 63 subjects independently assessed) were treated above the FDA’s lifetime maximum anthracycline limit of 550 mg/m2, with 1 subject having been treated with 3420 mg/m2 (or roughly six times the FDA approved lifetime anthracycline exposure) of standard anthracyclines and Annamycin and there has been no evidence of cardiotoxicity. After review of the data provided, the Independent Expert, in their most recent report and as stated in previous reports, concluded that there was no evidence of cardiotoxicity.

In March 2024, we were notified of an increase in one subject’s troponin levels seven weeks post cycle one and prior to initiation of a second cycle. Immediately post the second treatment the troponin levels decreased. All of the relevant subject's data were reviewed by our Expert. In the report of the Expert, the subject had other factors relatable to the increase in the troponins and deemed this event unrelated to the study drug Annamycin. We consider all data, including this data, preliminary and subject to change until a CSR is published.

We believe the Expert's reports are particularly relevant in light of a recently published retrospective study showing that the incidence of heart failure more than doubles for cancer patients treated with anthracyclines compared to cancer patients not receiving anthracyclines (C Larson, et al. Anthracycline and Heart Failure in Patients Treated for Breast Cancer or Lymphoma, 1985-2010. JAMA Network Open. 2023;6(2):e2254669. doi:10.1001/jamanetworkopen.2022.54669). Given the heart-damaging impact of prior treatment with currently prescribed anthracyclines, and considering that the subject population that we are enrolling in our Annamycin trials (multiple prior therapies, including anthracyclines known to be cardiotoxic, many elderly, and other comorbidities) we believe that there is a high likelihood that a cardiac event will occur in the future that we will not be able to disassociate from our study drug. We believe that the potential for such future incidences, however, does not outweigh the significant elimination of cardiotoxicity to date as reflected in the Expert’s reports.

The Importance of the Unmet Need in 2nd Line Therapies for AML

There are approximately 160,000 people with AML worldwide with about 20,000 newly diagnosed patients annually in the U.S. Anthracyclines are an important class of first line tools for physicians and while effective, their maximum lifetime dose in patients is limited due to concerns over cardiotoxicity. The following discussion, which includes estimates based on current literature and our discussions with key opinion leaders, suggests that approximately 60% of AML patients continue to have a significant unmet need. This is based on the reality that effective treatment options are limited. We estimate that only around 40% of AML patients are afforded an opportunity to overcome their disease through a curative bone marrow transplant or through lasting remission. We believe this aligns with the published statistic that the 5-year survival rate for AML is only 29%.

While the standard of care treatment can be complex, regionally variable (especially since not all current AML drugs are approved in all countries), and highly individualized (based on a range of factors including gene mutations), all AML patients are initially categorized based on their ability to undergo intensive chemotherapy. As a result, we estimate around 50% of patients are deemed “Fit” for standard intensive first-line treatment and the other 50% are deemed “Un-Fit.”

Those who are deemed “Fit” are most often treated with the “standard” induction therapy of three days of intravenous daunorubicin or equivalent anthracycline, and seven days of intravenous cytarabine, also known as Ara-C. We estimate that only about 36% of these patients, or approximately 18% of overall AML patients, will have a durable CR to first line therapy, meaning the cancerous cells in their bone marrow have been reduced to 5% or less. At this point, they either qualify for a bone marrow transplant or hope for the remission to become long lasting. Bone marrow transplants (BMT) can be successful in as many as 80% of eligible patients. However, since so few patients actually get to this point, we estimate that only a minor subset (approximately 14%) of all AML patients reach this positive outcome, through the standard first-line pathway for “fit” patients.

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The 50% of patients who are deemed “Un-Fit” for first-line intensive chemotherapy treatment are usually treated with a combination of Venetoclax and azacytidine, also known as “Ven-Aza”. The success rate, as we estimate, in this group of patients is only around 37%, or approximately 19% of all AML patients, achieving a durable CR and qualifying for a BMT or achieving long-term remission. Similarly, we estimate that as many as 80% of these responding patients will benefit from a bone marrow transplant or experience lasting remission. But again, this means that only a small subset of the deemed “Un-Fit” patients, approximately 15% of all AML patients, achieve this positive outcome.

In recent years, new targeted therapies have been approved (mostly in the US) and have become available to 2nd line patients (those patients for whom the 1st line therapies discussed above have failed), adding a new alternative. Unfortunately, we believe success here has been relatively limited. Five such drugs have been approved to date, but each is only relevant to a subset of AML patients who happen to have the requisite genetic mutation and response rates are relatively low. We estimate that only about 21% of 2nd line patients will achieve a durable CR which means only another 11% of the AML population is given a chance to beat their disease with a successful bone marrow transplant or lasting remission. This leaves, based on our estimates, about 58% of all AML patients who will ultimately succumb to their disease.

We believe this is not an acceptable outcome and are advancing Annamycin for the treatment of AML via our clinical trials. In multiple clinical studies, subjects treated with Annamycin have shown no signs of cardiotoxicity, allowing physicians to dose higher than the currently set limits for other anthracyclines or potentially treat traditionally "unfit" subjects. The subjects treated to date have included those who were initially deemed unfit for intensive chemotherapy and the initial, preliminary data suggest that Annamycin’s safety and tolerability profile may make the product suitable for those patients, too.

Annamycin Clinical Trials – AML

We have studied Annamycin in three internally funded AML clinical trials, one of which is still under way. These trials are MB-104, MB-105, and MB-106. In MB-105 and MB-106, we began seeing what we believe to be potentially significant efficacy in AML. Below is a discussion of these three trials with a focus on the most recent two.

Below in Table 2 is a summary of the preliminary responses in the concluded MB-105 monotherapy trial and the MB-106 combination therapy trial to date, both for the treatment of AML.

Table 2 - Summary of Annamycin Responses in MB-105 & MB-106 AML Studies as of March 19, 2024

All Subjects

Subjects Not Yet Evaluable 0 2 1 0

Subjects Evaluable To Date 5 18 2 10

Subjects Evaluable Not Dosed Per Protocol 2 0 1

Median Prior Therapies 6 1 0 1

Complete Responses (CR) 0 6 1 5

CR with incomplete recovery (CRi) 3 1 0 1

Total Complete Response(s) (CRc) 3 7 1 6

Complete Response (CR) Rate 0% 33% 50% 50%

Complete Response Composite (CRc) Rate 60% 39% 50% 60%

Partial Responses (PRs) 1 2 0 1

CRc Relapsed To Date 1 1 0 1

Durability of CR Not followed Developing Developing Developing

Notes for Table 2: 1) Data from MB-105 is showing only the five subjects treated per protocol in the last cohort and are shown as this cohort was at the recommended phase 2 dose or RP2D. 2) Data from MB-106 is for intent to Treat subjects; 3) Data from MB-106 is preliminary and subject to change; 4) Durability is developing; and 5) The 19th subject, being treated as a 3rd line therapy, had two BMAs tested where they have been inconclusive, and we are awaiting further testing. This subject will move the CRc in the “MB-106 Phase 1B/2 All Lines" column to either 42% or 37% (n=19).

MB-104: A Phase 1 clinical trial of Annamycin as a single agent for the treatment of relapsed and refractory (R/R) AML in the US was successfully completed in 2020. The FDA requested that we demonstrate that Annamycin could be safely administered to subjects up to the lifetime maximum allowable level of anthracycline (LTMAD) established by the FDA and the trial met this primary endpoint. The FDA established the LTMAD because of concerns about cardiotoxicity associated with currently approved anthracyclines when administered above the LTMAD. Our Independent Expert, as discussed above, noted that after review of the data for the subjects in this trial there were no signs of cardiotoxicity.

MB-105: As a result of discussions with the FDA after MB-104, we focused our continuing efforts on establishing an RP2D for Annamycin in our Phase 1/2 single agent R/R AML clinical trial in Europe. In December 2018, we began treatment at the final dose of MB-104 of 120 mg/m2. In February 2022, we successfully concluded the Phase 1 portion of that trial and established the RP2D of 240 mg/m2. A total of 20 subjects were enrolled in this trial. Significant adverse events (AE’s) > grade 3 in this trial (n=20) were: neutropenia 65%, thrombocytopenia 50%, anemia 40%, febrile neutropenia 30%, and pancytopenia 10%. Drug related serious adverse events (SAE’s) were: thrombocytopenia and anemia 25% each, febrile neutropenia 20%, neutropenia 10%, and mucosal inflammation, neutropenic infection, hepatocellular injury, hypotension, hepatotoxicity, sepsis and infusion related reaction 5% each.

Additionally, our Expert noted that after review of the data for the nineteen of the twenty subjects in this trial there were no signs of cardiotoxicity. One subject who received a partial dose of Annamycin and left the trial had no post-treatment evaluations performed. Additionally, 15 subjects were taken over the LTMAD and exposed as high as 1800 mg/m2 as allowed by the protocol.

In the final cohort, five subjects received a full course of Annamycin and demonstrated an ORR of 80% with one CRi and three PRs. However, in two of the PRs, as noted by the site, subjects' bone marrow blast counts were successfully decreased to below 5%, however these subjects were still designated as a PR by the sub-investigator at that site. We include these subjects as CRis since their results met the definition of CRi per the protocol and thus believe that a CRi rate of 60% would be more accurate.

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As a part of our ongoing sponsored research at MD Anderson, animal testing indicated that the combination of Annamycin with Ara-C (AnnAraC) provides a synergistic effect that is more effective in AML mouse models than either drug alone. These data were presented at the 62nd Annual Meeting & Exposition of the American Society for Hematology (ASH) under the title: "High Efficacy of Liposomal Annamycin (L-ANN or L-Annamycin) in Combination with Cytarabine (AnnAraC) in Syngeneic p53-null AML Mouse Model." This study was conducted in a highly aggressive AML mouse model where median survival is approximately 13 days. For animals treated with AnnAraC, median survival ranged from 56 to 76 days, thus expanding median survival by 585%, with some animals having no signs of any tumors after treatment. Additionally, when looking at median overall survival (OS) for the mice in the study, AnnAraC demonstrated a 68% improvement in the OS compared to Annamycin as a single agent and a 241% increase in OS compared to Cytarabine alone. We believe these experiments supported initiation of clinical development of the combination of Annamycin and Ara-C in AML patients.

This combination was achieved via a promising advancement in lipid enabled drug delivery developed in collaboration with and exclusively licensed from MD Anderson. The unique patent-pending lipid composition allows us to combine a new concept in chemotherapeutic agents within a lipid structure that helps target the delivery of the payload and reduce the potential for toxicity. In the case of Annamycin, our unique use of lipid technology enables improved tissue/organ distribution and, as demonstrated in multiple clinical trials, dramatically reduced toxicity, including avoiding cardiotoxicity.

Although Annamycin had already shown human activity as a single agent in its two Phase 1 AML clinical trials and had shown no signs of cardiotoxicity, the observed synergy in vitro and confirmatory in vivo data suggested that the AnnAraC could be more effective in a clinical setting than Annamycin as a single agent. This would be consistent with the current practice to use Ara-C in combination with other anthracyclines in AML patients. The most common first-line therapy for fit AML patients currently is the combination of an anthracycline and Ara-C in a regimen referred to as "7+3" where Ara-C is administered daily for 7 days in parallel with 3 daily doses of an anthracycline. Simply substituting Annamycin for the currently used anthracycline in a similar 7+3 (or as is the case in MB-106, 5+3), regimen would therefore represent a familiar and well-practiced treatment modality. Beyond that, we believed it would have the added advantages that Annamycin has been shown in published research to be active against tumor cells resistant to doxorubicin and, importantly, has the potential to remove the concern for cardiotoxicity, a significant toxic side effect currently limiting the use of anthracycline-based intensive chemotherapy. Thus, we began focusing our efforts on a clinical trial studying AnnAraC for the treatment of AML in Europe.

MB-106: On May 2, 2023, we announced successful completion of the first cohort in our Phase 1B portion of our Phase 1B/2 clinical trial using Annamycin in combination with Cytarabine for the treatment of AML. This study is utilizing a “5+3” regimen where Annamycin is administered with three days of infusion along with the five days of infusion of Cytarabine. As we noted, this combination strategy is similar to the familiar “7+3” induction therapy that is considered to be a standard of care in AML, where seven days of Cytarabine infusions are paired with three days of an approved anthracycline (typically, daunorubicin).

In the first cohort 3 subjects were treated, all of whom were relapsed from multiple prior therapies. Annamycin was dosed at 190 mg/m2, along with Cytarabine at 2.0 g/m2/day for five days (total dose of 10g/m2).

The median number of prior therapies for these three subjects in the first cohort was five (range of one to six). One subject, who was 78 years of age at the time of the study initiation and enrolled after a single prior multi-year therapy, achieved a CR that has continued to be durable at 12 months. This subject has received a second and recently a third course of treatment, during the ensuing 11 months, at the direction of the treating physician. This subject has not experienced a relapse to date. The other two subjects were shown to have disease progression.

At the recommendation of the safety review committee, we deemed the first cohort dose as safe and opened the second cohort with the Annamycin dose being increased to 230 mg/m2. On August 7, 2023, we successfully completed the second cohort at 230 mg/m2 of Annamycin in this combination study. Four subjects were treated in this cohort, one is believed to be relapsed from one or more prior therapies and three are believed to be refractory to up to three prior therapies. One subject was replaced due to a Serious Adverse Event (SAE) experienced on first day of dosing. The SAE was determined to be unrelated to Annamycin and definitively related to Cytarabine: an allergic reaction to the Cytarabine infusion. At the recommendation of the safety review committee, we deemed the second cohort dose as safe and as the recommended expansion phase dose and opened recruitment, including for both first line therapy and for subjects who are refractory to or relapsed after induction therapy, to the Phase 2 portion of the trial. The median number of prior therapies for the three evaluable subjects in the second cohort was two (range of one to three) and the median age was 67. One subject, who was 64 years of age at the time of enrollment into the study with one prior therapy, was deemed a CR (complete response), which was shown to be durable at approximately three months, at which point the subject proceeded to a bone marrow transplant. The other two subjects were shown to have disease progression.

On October 2, 2023, we announced the initial subjects had been treated in the Phase 2 portion of MB-106. To date, 20 subjects have been enrolled in the full MB-106 Phase 1B/2 study. At the end of January 2024, we completed recruiting the desired number of 2nd line subjects and began preparation for an End of Phase 2 (EoP2) meeting with the FDA. In addition, we expanded the MB-106 study protocol to include 1st line subjects to provide data to enable the designing of a potential confirmatory Phase 3 post-approval study, however we do not expect the addition of this cohort to delay our EoP2 meeting. Our current planned pathway for approval for Annamycin in combination with Cytarabine for the treatment of AML is as a 2nd line therapy. Therefore, our focus is primarily on securing an accelerated approval pathway for the treatment of 2nd line subjects (those who were relapsed from or refractory to a 1st line AML therapy, regardless of whether the subject was deemed “fit” or “unfit”).

As mentioned previously, the MB-106 clinical trial with Annamycin in combination with Cytarabine for the treatment of AML is an “all-comers” (as discussed above) trial, accepting subjects with a wide range of prior therapies. The total subjects recruited to date is 20 where one first-line subject just began treatment and another third-line subject has not yet been fully evaluated. Currently, we have a composite complete response (CRc) rate of 39% in all evaluable subjects (n= 18). This is comprised of a CR rate of 33% and CRi rate of 6%. We believe that the most important subgroup in this trial to be subjects for whom AnnAraC is their 2nd line of therapy. When stratified for that population (n=10), the CRc rate is 60% being comprised of a CR rate of 50% and a CRi rate of 10%. The 19th subject, being treated as a 3rd line therapy, had two BMAs that were inconclusive, and we are awaiting further testing. This subject will move the CRc for the full trial to either 42% or 37% (n=19), depending on the final assessment of the BMA.

Durability data are developing with one CR having relapsed to date with 4.5 months of durability. The first CR subject was treated in February 2023 and remains durable to date. Durability of CRc's is confirmed by repeat bone marrow aspirates (BMAs). The median age of all subjects recruited is 69, ranging from 19 to 78. This trial may enroll up to 28 subjects with recruitment for subjects as 2nd line therapy having ended in January 2024. The trial continues recruitment for treatment as 1st line and 3rd line therapy.

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The first CR subject was treated in February of 2023 and has not relapsed to date, having received a third course of AnnAraC in February 2024. One CR has relapsed to date as noted in Table 2 above. The relapse occurred at the same study site where a subsequent review of the anti-microbial standard of care for patients during the peri-chemotherapy infusion period was not consistent with the standard of care recommended by the leading medical organizations. This site also had a significantly greater rate of infections than was reported at the other study sites. These infections precluded the use of an additional course of chemotherapy, which has been utilized in most patients who have achieved a durable CR or CRi at the other MB-106 study sites. We believe that this lack of additional courses of AnnAraC may (and we stress "may") have contributed to the only relapse in MB-106 following a CR and the only death to a CRi subject to date. The death was not deemed disease progression and occurred after a series of infections. This subject was scheduled for a BMT.

We have also begun recruiting 1st line subjects into this trial to provide data for a possible future confirmatory Phase 3 clinical trial in 1st line patients. The first two subjects for whom AnnAraC was considered 1st line therapy have been treated, and upon evaluation it was determined that the treatment resulted in a CR for one of the subjects. The other subject was deemed a treatment failure, withdrew from our study, received a different therapy, and subsequently expired.

Currently, the median age of the recruited subjects in MB-106 is 69 years (range of age is 19 to 78 years) with a median number of prior therapies for AML of 1 (range of 0 to 6). The trial has recruited 20 subjects to date with 2 (1 from the 2nd line of therapy population) subjects withdrawing from the trial due to adverse events and 1 other subject not yet having a bone marrow aspirate fully evaluable. We may recruit up to 28 subjects in the Phase 1B/2 clinical trial, however, having already recruited the desired number of 2nd line subjects to support our EoP2 meeting with the FDA, we may elect to complete this trial with fewer than 28 subjects. At our current rate of progress, we expect to conclude the trial and report topline data in 1H 2024.

There continues to be no evidence of cardiotoxicity as reported by an independent Expert’s reports following assessments of 4 subjects' data from this trial (included in the Expert evaluations of 63 subjects from all our Annamycin clinical trials). The balance of the subjects in the trial will be reviewed by the Independent Expert in the near future.

In all subjects enrolled to date (n=20) in MB-106 adverse events (Grade < 3) are as follows: thrombocytopenia 47.4%; neutropenia 31.5%; anemia 21.1%; and infections (pneumonia, sepsis, septic shock and staphylococcal bacteremia) 10.5%. Two subjects experienced adverse events and were not dosed per protocol with one having an allergic reaction to Annamycin, the first we have seen in over 70 subjects dosed in our multiple Annamycin clinical trials; the second adverse event was due to an allergic reaction to cytarabine. The CR/CRis have been spread across 3 different sites in two different countries (Poland and Italy) and 7 out of 9 sites participating in the study have recruited subjects to date.

We have been and intend to continue reporting top-line results in all of our clinical trials on a quarterly basis or when a recruiting or regulatory milestone is achieved. Top-line results will include reporting of any drug-related adverse events (AEs) and assessment of cardiotoxicity, as described above. Top-line results will also include the number of partial responses (PRs) and complete responses (CRs), each of which is essentially a function of the magnitude of reduction in a subject's BMA. For purposes of these clinical trials, a CR means that the subject's BMA reduced to 5% or less with recovery of neutrophils (or white blood cells) and platelets, CRi means a CR where there was incomplete recovery of neutrophils and/or platelet counts, and a PR means the subject's BMA reduced by 50% and resulted in a blast count of 25% or less.

MB-108: The strategy to begin the next AML study, which we intend to be a pivotal study, is to approach the FDA or its foreign equivalent for Annamycin to be a 2nd line therapy and design an accelerated approval pivotal trial, with a follow-on confirmatory Phase 3 trial. As mentioned above, we have now concluded the recruitment of subjects for 2nd line treatment in MB-106, enabling evaluation of the necessary data for submission to the regulatory authorities as support for such a trial.

The data above regarding human activity are all from our studies and are preliminary and subject to change, unless a clinical study report (CSR) has been published or the investigator-initiated study has concluded and issued its annual report. “Right-to-try” data are preliminary until published. Such activity may or may not be repeated in future clinical trials, including potentially pivotal and/or confirmatory clinical trials. While we believe such data are encouraging, the FDA or its foreign counterpart will ultimately determine if such data and future data are individually conclusive and supports future clinical trials or approval.

Annamycin Clinical Trials – STS Lung Metastases

We announced in April 2019 that our ongoing sponsored nonclinical research at MD Anderson demonstrated that Annamycin may improve survival in an aggressive form of triple negative breast cancer metastasized to the lungs in animal models. Annamycin was previously shown to be significantly more potent than doxorubicin in both Lewis lung carcinoma in animal models and in small cell lung cancer in vitro models. In addition to seeing activity in animal models of triple negative breast cancer metastasized to the lungs, we have also seen activity in colon cancer metastasized to the lungs. The particular animal models used in our testing are considered to represent very aggressive forms of cancer.

Furthermore, a poster entitled, "Liposomal annamycin inhibition of lung localized breast cancer," was presented at the San Antonio Breast Cancer Symposium held in December 2019. The published poster (https://www.moleculin.com/san-antonio-bc-symposium-poster/) shows substantially increased survival in both triple negative breast cancer and colon cancer lung metastases animal models. It should also be noted that treatment with Annamycin resulted in long-term survival of a significant number of animals, even when cancer was reintroduced into the animals post initial treatment, suggesting the development of beneficial immune memory. A reduction in tumor growth was demonstrated as well as a reversal of tumor activity resulting in an almost complete reduction of tumor burden. Such preclinical results may not be replicated in human clinical trials.

We announced in early 2021 that Annamycin demonstrated consistently high antitumor activity in tested animal models of different types of lung-localized cancers, including sarcoma. These promising findings correlate with a high uptake of Annamycin to the lungs in animal models. We found in our studies that Annamycin uptake to the lungs is over 30-fold higher than that of doxorubicin, the primary first-line chemotherapy for advanced soft tissue sarcoma. The limited pulmonary uptake of doxorubicin in animal models may help explain its limited activity against STS lung metastases in humans. Additionally, our clinical data to date show no cardiotoxicity associated with the use of Annamycin, and the published research demonstrate Annamycin’s ability to avoid multidrug resistance mechanisms, both of which are often treatment-limiting effects of anthracyclines (which includes doxorubicin) in this setting. Taken together, these factors suggest that Annamycin could represent an important treatment to help address a significant unmet need in patients with STS lung metastases.

In February 2021, we announced that a preclinical study in animals had suggested a possible significant therapeutic benefit of Annamycin against metastatic osteosarcoma. As of day 130 of the study, the survival rate for animals treated with Annamycin was 100%, compared with only 10% for untreated animals. Computerized tomography scans demonstrated that animals treated with Annamycin exhibited suppression of tumor growth and not a single death was observed in the treated animals, whereas observed tumor burden was believed to have contributed to the rapid death of 90% of untreated animals. We believe these data are a promising indication of the possibility of Annamycin’s impact on other cancers metastasized to the lungs. We caution that these are preclinical animal data and we can provide no assurance that we will see similar results in our clinical trials, let alone ultimately obtain approval of Annamycin for this use.

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It is estimated that there are approximately 36,000 new cases of STS in the seven major markets (US, EU5 and Japan) each year. Our clinical advisors estimate that approximately half of all STS patients will eventually develop lung metastases from their primary tumor. Although first-line treatments such as surgical resection, chemotherapy and radiation may provide initial therapeutic benefit for approximately one third of those patients, there are no approved or emerging second-line therapies for the remaining patients who relapse or are refractory. Although the lungs tend to be a major site of relapse, when we began our own clinical trial MB-107 using Annamycin against STS lung metastases, we were aware of only a very few active clinical trials specifically targeting STS lung metastases, indicating that Annamycin currently faces limited competition in this area of development.

Along with the results in STS lung metastases, our animal models have shown activity in other lung metastases, including osteosarcoma, colorectal and triple negative breast cancer, as well as meaningful concentration levels of Annamycin in the liver, spleen and pancreas. Additionally, when tested in a highly aggressive AML mouse model, Annamycin significantly reduced tumor burden in the spleen, lungs, and liver, leading to an increase in survival. Based on these promising preclinical data, we believe the ultimate market opportunity for Annamycin could be larger than just STS lung metastases. As such, we may expand our clinical trials into these areas in the near term using externally funded trials.

MB-107: In December 2020, the FDA allowed our IND to go into effect to study Annamycin for the treatment of soft tissue sarcoma lung metastases. This allowed us to begin a Phase 1b/2 clinical trial in the US for subjects with STS lung metastases after first-line therapy for their disease. The trial began in the first half of 2021. The Phase 1B was concluded in July 2022. On September 21, 2023, we announced the completion of enrollment in the Phase 2 portion of our U.S. Phase 1B/2 clinical trial evaluating Annamycin as monotherapy for the treatment of soft tissue sarcoma lung metastases. Subjects who had stable disease at the time of study discontinuation will continue to be followed for progression free response and overall survival.

All subjects had pulmonary metastases from soft tissue sarcoma and at least one prior therapy. There was no limit on how many prior therapies a subject could have prior to entering this study. Most subjects were heavily treated with other therapies prior to entering our trial with our treatment representing the fourth median therapy for all subjects in the Phase 1B and Phase 2 portion of the trial (range of two to twelve). As of March 1,2024, as reported by the investigation sites, nine subjects in Phase 2 are alive whose OS is currently below the Phase 2 median OS, so OS data are not available at this time for that phase.

Below in Table 3 is a summary of progression free survival for evaluable subjects, as discussed further below, by groupings and median overall survival for all subjects evaluable in Phase 1B:

Median O/S mos Developing 11.3 Developing Developing Developing Developing

In the Phase 1B portion of the trial, subjects were treated from 210 mg/m2 to 390 mg/m2. In the Phase 2 portion of the trial, an exploratory RP2D of 360 mg/m2 was initiated for the first 3 subjects and a final RP2D of 330 mg/m2 was determined and 15 subjects were treated.

Including the 3 subjects treated at the same dose in the Phase 1B portion of this trial, this equates to seventeen total subjects measurable for efficacy at the 330 mg/m2 dose level. Including all measurable subjects at all dose levels in the Phase 1B portion of the trial, thirty-two subjects were treated with at least one cycle in this study and twenty-seven received at least two cycles of treatment. For the Phase 2 subjects, the median time to entering the MB-107 trial from the time of initial diagnosis is estimated, based on clinical data to date, to be approximately 20 months, and these subjects have been mostly heavily treated previously for STS lung mets prior to entering our study.

Once all data are collected, we plan a more in-depth presentation of the topline data for this study in 2024. Based on the data as shown in Table 3 above, we believe the following observations are in order:

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The data above regarding human activity are all from our studies and are preliminary and subject to change, unless a CSR has been published or the investigator-initiated study has concluded and issued its annual report. “Right-to-try” data are preliminary until published. Such activity may or may not be repeated in future clinical trials, including potentially pivotal and/or confirmatory clinical trials. While we believe such data are encouraging, the FDA or its foreign counterpart will ultimately determine if such data and future data are individually conclusive and supports future clinical trials or approval.

IIT STS Lung Mets or Rutkowski Trial NIO-0002: We have collaborated with physicians in Poland at the Maria Sklodowska-Curie National Research Institute of Oncology (MSCNRIO) and are currently supporting a physician-sponsored (externally funded) clinical trial there with study drug. We previously announced their facilitation of a grant equivalent to $1.5 million to fund a Phase 1B/2 clinical trial of Annamycin for the treatment of STS lung metastases. The grant-funded clinical trial is led by Prof. Piotr Rutkowski, MD, PhD, Head of Department of Soft Tissue/Bone Sarcoma and Melanoma at MSCNRIO, and it will be operated independently of our study in the US.

The trial has a dosing regimen of once per week rather than once every 21 days as in the US trial. This trial began dosing subjects in late 2022. Six subjects have been enrolled and treated to date (three in cohort 1 at 35 mg/m2; three in Cohort 2 at 60 mg/m2)). A DLT was noted. The cohort was expanded and a fourth subject in Cohort 2 has been identified, consented in February 2024 and is currently in screening. The preliminary data to date is 50% (3 of 6) have received greater than two cycles (approximately 2 months) of therapy where we have assumed stable disease (SD) through two cycles. One of these three subjects has initiated cycle 5 (with us assuming SD through four cycles). This is all based on a preliminary data from the IIT dosing tracker. The data are preliminary and subject to change.

Previously, this trial was facilitated by WPD Pharmaceuticals (WPD), based in Poland. In March of 2023, WPD assigned their rights and duties related to the grant-funded trial at MSCNRIO to us as part of WPD’s termination of its sublicense.

The WP1066 Portfolio Program

We have a license agreement with MD Anderson pursuant to which we have been granted a royalty-bearing, worldwide, exclusive license for the patent and technology rights related to our WP1066 Portfolio and its close analogs: molecules targeting the modulation of key oncogenic transcription factors. In 2019, the FDA granted ODD for WP1066 for the treatment of glioblastoma, which means the agency believes we have established a medically plausible basis for using the drug to treat glioblastoma.

We believe our WP1066 Portfolio (including lead drug candidates WP1066 and WP1220), represents a novel class of agents capable of hitting multiple targets, including the activated form of a key oncogenic transcription factor, STAT3. A substantial body of published research has identified STAT3 as a master regulator of a wide range of tumors and has linked the activated form, p-STAT3, with the survival and progression of these tumors. For this reason, it is believed that targeted inhibition of p-STAT3 may be an effective way to reduce or eliminate the progression of these diseases. Since 2021, we have been working on developing an appropriate IV formulation for WP1066 or its analogs. As a result of these studies, we believe we have now identified a candidate formulation that is worthy of IND-enabling preclinical testing, which is now underway. Furthermore, we retained an option to license WP1732 but in January 2024 we notified MD Anderson of our intent to terminate the option.

The high level of anticancer activity demonstrated in multiple tumors in animal models by WP1066 is potentially related to its ability to also inhibit such important key oncogenic transcription factors such as c-Myc and HIF-1α. In addition to direct anticancer effects not related to the function of the immune system, our lead drug candidate WP1066 has also been shown to boost immune response in animals, in part by inhibiting activity of TRegs, which are coopted by tumors to evade the immune system. We believe the dual effect of (1) directly inhibiting tumor growth and inducing tumor cell death and (2) separately boosting and directing the natural immune response to tumors is therapeutically promising. If additional preclinical and clinical data validate these two avenues of apparent activity, this class of drugs may be well-suited to treat a wide range of tumors, both as single agents and as critical elements of successful combination therapies targeting even some of the most difficult-to-treat cancers.

The recent oncology drug landscape has been dominated by immunotherapy, specifically including checkpoint inhibitors. In the last 5 years, checkpoint inhibitors (such as Opdivo and Keytruda) have reached over $10 billion in annual revenues. To summarize checkpoint blockade therapy, the T-Cells within an individual’s own immune systems should be capable of identifying tumor cells and destroying them before they destroy the individual. Unfortunately, tumors develop the ability to prevent this natural immune response by regulating the expression of certain receptors referred to as “immune checkpoints” that then bind to T-Cells and prevent them from attacking the tumor. Immune checkpoint inhibitors are antibodies that block these receptor mechanisms and allow the T-Cells to act normally and attack the tumor.

In certain types of tumors, like melanoma, checkpoint inhibitors work well, and the results can be impressive, creating durable suppression of tumors where no other therapy had succeeded. However, despite the outstanding results in select patients, checkpoint inhibitors benefit only a limited number of patients in certain cancers, and they are essentially not effective in what are called “non-responsive” tumors like glioblastoma and pancreatic cancer, among others. As a result, companies are now focusing heavily on combination therapies, combining immune checkpoint inhibitors with chemotherapy, as well as other agents. We believe there is a need for new chemotherapeutic agents that, by their specific mechanism of action, would produce potent combination effects with immune checkpoint inhibitors, and that additionally can boost immune system response on their own. In this regard, there is early preclinical evidence that WP1066, as a single agent, may have the ability to reverse immune tolerance in brain tumor patients (Cancer Res, 67(20), 9630, 2007), and preliminary data in animal models that suggests WP1066 may have a potential for combination use with checkpoint inhibitors. We intend to pursue additional externally funded studies to build on this preclinical evidence and preliminary animal model data.

Published research papers have presented several findings that may point to new opportunities for our WP1066 class of drugs. One such article suggested that our STAT3 inhibitor WP1066 abrogated PD-L1/2 expression in cancer cells and may be a useful agent in addition to checkpoint inhibitor immunotherapy in cancer patients (J Clin Exp Hematop, 57(1), 21-25, 2017). Other published results show that CTLA4-induced immune suppression occurs primarily via an intrinsic STAT3 pathway, suggesting that, through its inhibition of activated STAT3, WP1066 might work well in combination with this checkpoint inhibitor (Cancer Res, 77(18), 5118–28, 2017).

A separate paper presents selected key transcription factors as being responsible for the upregulation of an often-targeted checkpoint actor in tumors known as PD-L1. Some of the most important transcription factors identified were HIF-1α, c-Myc and STAT3, the very targets for which WP1066 was designed (Front Pharmacol, 2018 May 22, 9:536, doi: 10.3389/ fphar.2018.00536, eCollection 2018).

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WP1066

WP1066 is our flagship Immune/Transcription Modulator. It has been the subject of over 50 peer-reviewed articles and its activity against p-STAT3 has now been validated in independent labs around the world. This discovery was inspired by a naturally occurring compound (caffeic acid) in propolis (from honeybees). Caffeic acid has shown a natural ability to inhibit p-STAT3, which is considered a master regulator of inflammatory processes that support tumor survival and proliferation.

WP1066 has exhibited an ability to inhibit other key oncogenic transcription factors, including c-Myc and HIF-1α. A critical characteristic of WP1066 and its analogs is the ability to inhibit p-STAT3 independently of upstream cell signaling. We believe this overcomes the limitations of many other drugs designed to inhibit STAT3 activity by blocking upstream receptors.

Another important attribute of WP1066 (unlike some of our other Immune/Transcription Modulators) is its apparent ability in pre-clinical testing to cross the blood brain barrier, which we believe makes it a good candidate for potentially treating brain tumors and other malignancies of the central nervous system. WP1066 has shown significant anti-tumor activity and increased survival in a wide range of tumor cell lines and animal models.

As with other analogs in this portfolio, WP1066 also has demonstrated in animal models the ability to boost a natural immune response to tumor activity. In animal models, WP1066 has been shown to upregulate STAT1, a transcription factor associated with immune stimulation. At the same time, it has been shown to reduce levels of Regulatory T-Cells, or TRegs, which are coopted by tumors to protect themselves from attack by the patient’s natural immune system. This forms a unique dual action (directly attacking the transcription factors that support tumor development and separately boosting the natural immune response to tumors) that may make WP1066 well suited to treat a wide range of tumors and possibly also serve as an important element in combination therapies targeting some of the most difficult cancers.

In vitro testing has shown a high level of activity for WP1066 against a wide range of solid tumors, and in vivo testing has shown significant activity against head and neck, pancreatic, stomach, and renal cancers, as well as metastatic melanoma and glioblastoma, among others. In vivo testing in mouse tumor models indicates that WP1066 inhibits tumor growth, blocks angiogenesis (a process that leads to the formation of blood vasculature needed for tumor growth) and increases survival.

Our own sponsored research and published findings from independent researchers point to the possibility that administration of WP1066 could lead to improved treatment results in many patients receiving checkpoint inhibitor therapy. Additionally, in April 2019 we announced that preclinical data supporting activity of our STAT3-inhibiting Immune/Transcription Modulators was presented by Dr. Waldemar Priebe, our co-founder and chair of our Scientific Advisory Board, at the 2019 Annual Meeting of the American Association for Cancer Research (AACR) in Atlanta, GA. The abstract (AACR Abstract: https://www.moleculin.com/inhibition-of-stat3-in-pancreatic-ductal-adenocarcinoma-and-immunotherapeutic-implications/) and the presentation included data resulting from preclinical evaluation in pancreatic cancer models of the STAT3 inhibitor WP1066. In vitro efficacy of this inhibitor was assessed using proliferation and apoptosis induction assays in a panel of patient-derived and commercially available Pancreatic Ductal Adenocarcinoma (PDAC) cell lines. WP1066 was shown to be potent and to induce apoptosis and inhibit p-STAT3 and its nuclear localization in all tested PDAC cell lines. Observed IC50 values ranged from 0.5 to 2 μM. Importantly, WP1066 shows in-vivo efficacy in preliminary experiments when tested alone or in combination with T cell immune checkpoint inhibitors.

Clinical Trials for the WP1066 Portfolio

At the 2019 annual meeting of the Society for Neuro Oncology (SNO), Emory University researchers reported encouraging activity in animals with their in vitro pediatric brain tumor models using WP1066. Based on these data, they filed and received clearance to proceed with an IND for a trial to treat children with recurrent or refractory malignant brain tumors with WP1066. This trial is being conducted at the Aflac Cancer & Blood Disorders Center at Children's Healthcare of Atlanta.

In February 2023, the Emory physician-sponsored clinical trial for the treatment of pediatric brain tumors with WP1066 concluded with treating a total of ten subjects in all three cohorts of the Phase 1 dose escalation portion of the trial. The third cohort dosing was deemed safe at 8mg/kg. In that trial, one of the subjects in the first cohort with DIPG showed an apparent response to the treatment with both clinical improvement and radiologic reduction of tumor size. In the ten subjects treated, eight subjects discontinued due to progression or refusal to continue after two cycles. One subject received four cycles prior to progression and one subject received five cycles prior to progression. We caution that this is preliminary data, and no conclusions should be drawn from these events. It is our belief that Emory will continue with a study of WP1066 into a Phase 2 program once further progress is made in a similar adult study.

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WP1220

An analog of WP1066, referred to as WP1220, was previously the subject of an IND (WP1220 was referred to as “MOL4239” for purposes of this IND) related to use of the molecule in the topical treatment of psoriasis. Clinical trials were commenced on WP1220 in the US but were terminated early due to limited efficacy in the topical treatment of psoriatic plaques. Notwithstanding its limitations in treating psoriasis, our pre-clinical research in multiple CTCL cell lines has suggested that WP1220 may be effective in inhibiting CTCL. Based on these data, we are open to discussions with various pharmaceutical companies for further development of this molecule. CTCL is a potentially deadly form of skin cancer for which there are limited treatment options.

Clinical Activity WP1220

In February 2020, we announced the final data from our CTCL clinical trial of WP1220, which were published and presented by Dr. M. Sokolowska-Wojdylo in conjunction with the 4th Annual World Congress of Cutaneous Lymphomas in Barcelona, Spain on February 13, 2020. The final results supported the safety of topical WP1220 and demonstrated an improvement in the Composite Assessment of Index Lesion Severity (CAILS) score.

Mycosis Fungoides or MF, the most common variant of CTCL, is a disease with symptomatic, disfiguring skin lesions. STAT3, an oncogenic transcription factor, has been identified as a critical regulator of MF, whereby the activation of STAT3 through phosphorylation (p-STAT3) has been linked to tumor proliferation and suppression of immune responses. Preclinical testing demonstrated that WP1220, a synthetic compound, potently inhibits the activity of p-STAT3 and the growth of CTCL cell lines. This Phase 1 study was designed to demonstrate the safety and efficacy of WP1220 after topical treatment of CTCL.

Of five subjects enrolled, eleven lesions were assessed according to the CAILS scoring system. The only related AE was mild contact dermatitis in one subject that the investigator deemed was not related to the drug. Four of the five subjects improved in CAILS scores on index lesions, with one exhibiting stable disease, with a median reduction of 56% (range 25-94%). Three of the subjects exhibited a PR. Improvement was noted within seven days of treatment initiation and maintained 1 month after discontinuation. Of the eleven lesions, 45% exhibited a CR or a 50% or more reduction in CAILS and 55% exhibited stable disease with 100% showing a clinical benefit. Independent dermatologic review based on photographic documentation was conducted and corroborated these findings.

Although this was a small proof-of-concept clinical trial, topically applied WP1220 had no safety issues and appeared to be effective in MF. Topical application of WP1220 does not appear to result in systemic exposure to the drug, which is desirable in the case of a topical drug targeting a dermatologic condition.

Alternate Formulation for the WP1066 Portfolio

WP1220 and its close analogs are highly insoluble compounds and as such, WP1066 is currently administered orally. Unfortunately, the present formulation has an undesirable taste profile, and its bioavailability when delivered orally may not be optimum. Although preliminary data from physician-sponsored brain tumor trials indicate that the oral administration of WP1066 results in detectable levels of WP1066 in plasma, we believe our opportunity for successful development of a p-STAT3 inhibitor would be expanded if we were able to develop a compound capable of a different oral delivery or intravenous (IV) administration. In 2020, we began developing IV formulation methods for WP1066 and/or its analogs that might address these issues. Recently, we have succeeded in identifying a promising candidate for IV formulation and we have begun IND-enabling preclinical work, however there can be no assurance that this effort will be successful.

The WP1122 Portfolio Program

We have a license agreement with MD Anderson pursuant to which we have been granted a royalty-bearing, worldwide, exclusive license for the patent and technology rights related to our WP1122 Portfolio and similar molecules focused on inhibitors of glycolysis and glycosylation. These new compounds are designed to exploit the potential uses of inhibitors of glycolysis such as 2-deoxy-D-glucose (2-DG), which we believe may provide an opportunity to stop the fuel supply of tumors by taking advantage of their high level of dependence on glucose in comparison to healthy cells. A key drawback to 2-DG is its lack of drug-like properties, including a short circulation time and poor tissue/organ distribution characteristics. Our lead Metabolism/Glycosylation Inhibitor, WP1122, is a prodrug of 2-DG that appears to improve the drug-like properties of 2-DG by increasing its circulation time and improving tissue/organ distribution. New research also points to the potential for 2-DG to be capable of enhancing the usefulness of checkpoint inhibitors. Considering that we believe 2-DG lacks sufficient drug-like properties to be practical in a clinical setting, we believe WP1122 has the opportunity to become an important drug to potentiate existing therapies.

We believe this technology has the potential to target a wide variety of solid tumors, which eventually become resistant to all treatments, and thereby provide a large and important opportunity for novel drugs. Notwithstanding this potential, we are currently focused on the use of WP1122 and related analogs for the treatment of central nervous system malignancies and especially glioblastoma multiforme. Although less prevalent than some larger categories of solid tumors, cancers of the central nervous system are particularly aggressive and resistant to treatment. The prognosis for such patients can be particularly grim and the treatment options available to their physicians are among the most limited of any cancer. The American Cancer Society has estimated 25,400 new cases of brain and other nervous system cancers will occur in the United States in 2024, resulting in 18,760 deaths (https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/2024-cancer-facts-figures.html). Despite the severity and poor prognosis of these tumors, there are few FDA-approved drugs on the market.

Additionally, based on independent preclinical data, we believe this technology has the potential to impact hard to treat viruses that also rely heavily on glycolysis and glycosylation. Due to the COVID-19 pandemic, we looked to establish a RP2D for WP1122 in a Phase 1 clinical trial and certain countries had established accelerated COVID-19 focused programs for Phase 1 trials such as the United Kingdom.

An early 2021 study in India of 2-DG in COVID-19 subjects was conducted by the Institute of Nuclear Medicine and Allied Sciences (INMAS), a lab of the Defense Research and Development Organization (DRDO), in collaboration with Dr Reddy's Laboratories (DRL), Hyderabad, India. INMAS-DRDO scientists initiated a Phase 2 clinical trial on 2-DG in COVID-19 subjects in May 2020 during the first wave of the pandemic. This was followed by a Phase 3 study and an approval in May 2021, by Drugs Controller General India (DCGI) for emergency use of 2-DG as an adjunct therapy in subjects with moderate to severe COVID-19.

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Given that WP1122 is a prodrug of 2-DG designed to improve its circulation time and tissue/organ uptake, we consider this human data regarding 2-DG to be potentially relevant to the potential for WP1122 to be useful in treating COVID-19. The Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom had access to this and other data in approving our CTA, as discussed below, and did not require an animal testing model.

Clinical Trial for COVID-19 with WP1122

On October 19, 2021, we announced that we received authorization from the MHRA to commence a Phase 1a clinical trial of WP1122 in the United Kingdom. The Phase 1a study in healthy human volunteers investigated the effects of a single ascending dose (SAD) and multiple days of ascending dosing (MAD) of WP1122 administered as an oral solution.

On October 14, 2022, we provided an update on the preliminary results from the second MAD cohort of our Phase 1a study of WP1122. This cohort consisted of an initial 4 subjects, who were scheduled to be dosed daily for 7 days with 64 mg/kg/day of WP1122 or placebo in the dose escalation trial evaluating the safety and PK of WP1122. In conjunction with the study SRC, we stopped the second MAD cohort when 2 subjects experienced non-serious adverse events that, although asymptomatic, met the stoppage criteria in the protocol. Although we considered the potential to open a third MAD cohort (2a) to dose subjects at a reduced dose level of 48mg/kg/day for 7 days, we subsequently determined that the primary objectives of this Phase 1a study had already been met by establishing a safe and tolerable dose and that continued testing with healthy volunteers would not be a wise use of resources.

In late October 2022, after further review of the data and in discussions with our clinical team, we determined that the maximum tolerated dose (MTD) for WP1122 is a daily cumulative dose of 32 mg/kg in two divided doses for seven days, and we concluded the Phase 1a study of WP1122. We believe this will advance future studies of WP1122 in antiviral and oncology indications. We have concluded and published the clinical study report for this trial.

With an IND active for WP1122 for the treatment of glioblastoma, we have concluded that advancing WP1122 in these indications will occur only if external funds are available.

Potential Clinical Trial for GBM with WP1122

On December 1, 2021, we announced that the FDA allowed our IND application to study WP1122 for the treatment of GBM to go forward. With this IND cleared, we seek a partner to conduct an externally funded Phase 1 open label, single arm, dose escalation study of the safety, pharmacokinetics, and efficacy of oral WP1122 in adult subjects with GBM. Such a trial would enable parallel development of WP1122 as a cancer therapy. Consistent with our strategy of leveraging external funding for many of our clinical trials, we intend to seek opportunities for an investigator-initiated clinical trial of WP1122 in cancer patients going forward. There is no assurance that we will be successful in finding an investigator with access to externally sourced funds.

Additionally, we will rely on external collaborations for testing other molecules in the WP1122 portfolio against other hard to treat viruses such as HIV, Dengue fever, and Zika.

Funding Strategy

By “internally funded” we mean that the primary costs of the preclinical activity and clinical trials are funded and sponsored by us. By “externally funded” we mean that the preclinical work is performed by external collaborators and the clinical trials are physician-sponsored or IITs. For externally funded research, any grant funds that support such preclinical work or clinical trials and most of the associated expenses do not flow through our financial statements. For externally funded preclinical activities and clinical trials, we do provide drug product and other supporting activities for which costs are shown in our financial statements.

Working Environment

Our headquarters and laboratory are in Houston, Texas, and our workforce, as of year-end 2023, consisted of eighteen full and part-time employees, in the US which are leveraged with other service providers and contractors worldwide working in a primarily virtual environment. We do not have manufacturing facilities and all manufacturing activities are contracted out to third parties. Additionally, we do not have a sales organization. Our overall strategy is to seek the best value for our shareholders either via potential outlicensing or collaborative opportunities with other pharmaceutical companies with existing marketing, sales and distribution or via the development of contracted marketing, sales and distribution capability if and when our drugs are approved.

The spread of COVID-19 caused significant volatility in US and international markets, including Poland, where we conduct some of our clinical trials, and Italy, where our Annamycin drug supply is produced. In 2022, there was limited temporary interruption of our drug supply, and the ability to monitor activities was limited at most Polish clinics where we are conducting trials. The impact of the pandemic appears to have abated, although in the past this was shown to be a volatile situation that could return at any time.

Additionally, war, terrorism, geopolitical uncertainties (such as the current war in Ukraine and in Israel) and other business interruptions could cause damage to, disrupt or cancel the conduct of our clinical trials on a global or regional basis, which could have a material adverse effect on our business, clinical sites, drug suppliers or vendors with which we do business. Such events could also decrease the availability of subjects interested or able to enroll in our clinical trials or make it difficult or impossible for us to deliver products and services to our clinical investigational sites. In addition, territorial invasions can lead to cybersecurity attacks on technology companies, such as ours, located outside of the conflict zone. In the event of prolonged business interruptions due to geopolitical events, we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume our business or clinical operations. While having operations in neighboring Poland, we have no operations directly in Russia or Ukraine, but we do not and cannot know if the current uncertainties in these geopolitical areas, which are unfolding in real-time, will escalate and result in broad economic and security conditions or rationing of medical supplies or production facilities, which could limit our ability to conduct clinical trials or result in material implications for our business. In addition, our insurance policies typically contain a war exclusion of some description and we do not know how our insurers are likely to respond in the event of a loss alleged to have been caused by geopolitical uncertainties.

We cannot determine whether these events will materially impact our overall business and operations, recruitment, and our drug supply in the future.

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Our Intellectual Property and FDA Designations

We have obtained worldwide, exclusive licenses from MD Anderson to issued US patents and pending US patent applications for each of our drug candidates, as well as pending foreign patent applications or issued foreign patents. With respect to certain patents or patent applications, we are co-owners with MD Anderson, in which instances we have exclusively licensed MD Anderson’s rights in those patents or patent applications. Where MD Anderson has sole ownership of patents licensed to us, MD Anderson is responsible for the prosecution and maintenance of those patent applications, with input from us and at our expense. Where MD Anderson jointly owns patent applications with us, we are responsible for prosecution and maintenance of those patents and patent applications at our expense. As new discoveries arise with respect to our drug candidates, we and MD Anderson seek to protect our rights to those inventions by filing new patent applications. There can be no assurance that patent applications will issue as patents or, with respect to issued patents, that they will provide us with significant protection.

Issued patents generally expire 20 years after their filing date, subject to adjustment or extension under certain circumstances. For instance, the expiration of US patents may be adjusted to account for prosecution delays, if any, by the United States Patent and Trademark Office (USPTO). Some jurisdictions, including the US and countries belonging to the European Patent Convention, will extend the expiration of an unexpired patent for an approved pharmaceutical product by some portion of time required for clinical development and regulatory review. We intend to seek patent term extensions for patents claiming our product candidates where available. In addition, certain pharmaceutical regulatory bodies, including the US FDA and the European Medicines Agency (EMA), provide some period of exclusivity for new pharmaceutical products independent of patent protection. In the US, regulatory exclusivity can range from three (3) years for a product with a previously approved active pharmaceutical ingredient to seven (7) years for a novel product designated as an Orphan Drug.

We have obtained ODD from the FDA for Annamycin for the treatment of AML and STS; for WP1066 for the treatment of GBM; and, for WP1122 for the treatment of GBM. We have other FDA designations as discussed below. Detailed discussion of potentially relevant regulatory exclusivities can be found under Regulatory Exclusivities below.

The following provides a general description of our patent portfolio and is not intended to represent an assessment of claim limitations or claim scope.

Annamycin

We have pending patent applications directed to the synthetic processes for lyophilized Annamycin and for reconstitution of our Annamycin drug product candidate. We have exclusively licensed MD Anderson’s rights in these applications, which are co-owned by MD Anderson and us. The applications are pending in jurisdictions worldwide, including but not limited to Australia, Brazil, Canada, China, European Patent Organization, Japan, Israel, India, South Korea, Mexico, and the US. Both applications have a filing date of June 25, 2020. We also have rights to a patent application, filed on November 23, 2020, directed to the use of Annamycin for the treatment of certain lung cancers.

p-STAT3 Inhibitors

WP1066. We have rights to four issued US patents for WP1066. These patents claim WP1066 and other molecules, as well as methods of treating disease using WP1066. Foreign counterparts to the US patents are issued in Canada, China, Europe, Israel, India, Japan and South Korea. These patents have an international filing date in December 2004, and in certain instances have had the patent term adjusted.

WP1220. We have rights to three issued US patents which claim compositions of WP1220, as well as foreign counterparts issued in China, Eurasia, Europe, Japan, Mexico, New Zealand, Singapore and Ukraine. These patents have an international filing date in June 2009. In addition, we have rights to an issued US patent for the treatment of skin disorders using WP1220, with a filing date in September 2009.

WP1122

We have rights to an issued US patent with claims to compositions of WP1122 and methods for treating cancer using WP1122, with an international filing date in June 2009. We also have rights to foreign counterparts issued in China, Europe, and Japan. In addition, we have rights to US and foreign patent applications directed to the treatment of viral diseases with WP1122 and other anti-metabolites including WP1096 and WP1097, with a filing date in March 2021.

FDA Designations

To further enhance our intellectual property, we have the following FDA designations for our drug candidates as shown. The importance of these designations is discussed further below in the section titled Regulatory Exclusivities.

Annamycin Yes – AML, Soft Tissue Sarcoma Yes – AML, Soft Tissue Sarcoma No

WP1122 Yes - GBM Yes - GBM No

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Overview of The Market for Our Oncology Drugs

The American Cancer Society (https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/2024-cancer-facts-figures.html) estimates that cancer continues to be the second most common cause of death in the US, after heart disease. A total of 2.0 million new cancer cases and 611,720 deaths from cancer are expected to occur in the US in 2024, which is about 1,680 deaths a day. These statistics do not include either basal cell or squamous cell skin cancers because US cancer registries are not required to collect information on these cancers. These numbers also do not account for the effect the COVID-19 pandemic has likely had on cancer diagnoses and deaths because they are projections based on reported cases through 2019 and deaths through 2020.

Market for Annamycin

Per the American Cancer Society, digestive, reproductive, breast and respiratory cancers comprise most of expected cancer diagnoses in 2024, while cancers like leukemia and brain tumors are considered “rare diseases.” Leukemia in particular, can be divided into acute, chronic and other, with acute lymphoblastic leukemia (ALL) and AML comprising 27,350 of the estimated 62,770 new cases expected in the United States in 2024. The National Cancer Institute estimates that cancer-related direct medical costs in the US were $208.9 billion in 2020, which is likely an underestimate because it does not account for the growing cost of treatment; for example, the list price for many prescription medicines is now more than $100,000 annually.

Our lead drug candidate, Annamycin, is in a class of drugs referred to as anthracyclines, which are chemotherapy drugs designed to destroy the DNA of targeted cancer cells. The approved anthracyclines most commonly used are daunorubicin and doxorubicin and, prior to the expansion of their generic equivalents, world-wide annual revenues generated from anthracyclines have been estimated to approximate $1 billion. Acute leukemia is one of a number of cancers that are treated with anthracyclines. One industry report estimates that annual drug revenues generated from the demand for AML-related therapies in the United States, United Kingdom, France, Germany, Italy and Spain were in the range of $153 million in 2016, and it is estimated that this number is increasing with the increase in approved AML treatments – estimated to rise to $1.6 billion by 2025. Of this worldwide amount, the US market is estimated to comprise the largest share.

Leukemia is a cancer of the white blood cells and acute forms of leukemia can manifest quickly and leave patients with limited treatment options. AML is the most common type of acute leukemia in adults. It occurs when a clone of leukemic progenitor white blood cells proliferates in the bone marrow, suppressing the production of normal blood cells. Currently, the only viable option for acute leukemia patients is a bone marrow transplant, also known as a hematopoietic stem cell transplant, which is successful in a significant number of patients. However, in order to qualify for a bone marrow transplant, the patient’s leukemia cells must be decreased to a sufficiently low level. This usually begins with a therapy referred to as “7+3,” which consists of combining seven injections of Cytarabine with 3 infusions of an anthracycline to induce remission (a complete response, or “CR”). This therapy had not improved since it was first used in the 1970s and we estimate that this induction therapy had a success rate of about 20% to 25%. A revision to this therapy was approved in the form of a drug called Vyxeos, which combines Cytarabine and an anthracycline (daunorubicin) into a single liposomal injection given 3 times. This improvement appears to have increased the level of CRs to 34% and the overall survival by 3.5 months. Unfortunately, the current clinically approved anthracyclines (including Vyxeos) are cardiotoxic (i.e., can damage the heart), which can limit the dosage amount that may be administered to patients. Additionally, the tumor cells often present de novo or develop resistance to the first-line anthracycline, through what is called “multidrug resistance,” enabling the tumor cells to purge themselves of the available anthracyclines. Consequently, in the majority of these patients there remains no effective therapy for inducing remission sufficient to enable a potentially curative bone marrow transplant and unfortunately most patients will succumb quickly to their leukemia. If a patient’s leukemia reappears before they can be prepared for a bone marrow transplant, they are considered to have “relapsed.” If a patient fails to achieve a sufficient response from the induction therapy to qualify for a bone marrow transplant, they are considered to be “refractory” (resistant to therapy).

Until more recent new drug approvals, palliative care or focus on overall survival versus curative treatment was the predominant treatment modality for patients not suitable for traditional chemotherapy. In 2019, AbbVie’s Venclexta was approved by the FDA in combination with a hypomethylating agent (azacitidine or decitabine) or low-dose AraC (LDAC) for the treatment of newly diagnosed AML in patients who are 75 years of age or older, or for those ineligible (Un-Fit) for intensive induction chemotherapy due to co-existing medical conditions. In addition, 5 different targeted therapies have been approved in the U.S. for treatment of relapsed or refractory (2nd Line) AML patients. Despite these advancements, we believe approximately 60% of AML patients will either not qualify for or will not succeed with these available treatments, leaving a significant unmet need.

Together, this group of relapsed and refractory AML patients constitutes our primary focus for treatment with Annamycin and our intent is to pursue FDA approval for Annamycin as a second-line induction therapy for adult relapsed or refractory AML patients.

We believe that pursuing approval as a second line induction therapy for adult relapsed or refractory AML patients is the shortest path to regulatory approval, but we also believe that one of the most important potential uses of Annamycin is in the treatment of children with either AML or ALL (acute lymphoblastic leukemia, which is more common in children). Accordingly, we also intend to pursue approval for pediatric use in these conditions when practicable.

Soft tissue sarcoma is a broad term for cancers that start in soft tissues (muscle, tendons, fat, lymph and blood vessels, and nerves). These cancers can develop anywhere in the body but are found mostly in the arms, legs, chest, and abdomen.

The lungs are the most frequent site of metastasis from soft-tissue sarcomas. It has been estimated that as high as approximately 50% of the STS cases develop lung metastases. Effective systemic therapies for metastatic STS are currently limited; when possible, surgical removal of the lung metastases (known as pulmonary metastatectomy, PM) is the preferred treatment. However, guidelines for the performance of PM for STS do not exist and decisions to operate are often made on an individual basis (American Association for Thoracic Surgery (AATS). (2016, May 16). Increasing survival in soft tissue sarcoma patients with lung metastases undergoing resection. ScienceDaily. Retrieved March 3, 2023 from www.sciencedaily.com/releases/2016/05/160516181330.htm). Metastatectomy and/or chemotherapy are the most common treatments offered to patients with metastatic sarcoma. Pulmonary metastatectomy, either video-assisted or through a formal thoracotomy, has been shown to increase overall survival in select populations of both osseous and soft tissue sarcoma patients. The market is expected to grow as a result of factors like an increase in the patient pool.

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We believe that the market size of STS with lung metastases in the seven major markets is expected to rise from $177 million in 2017 to reach $198 million by 2030. According to our estimates, the highest market size of STS with lung metastases was estimated in the United States, followed by Germany. The market of STS with lung metastases is categorized into first-line and second-line therapies. The therapies in first-line treatment involve surgery, off-label treatment, and stereotactic radiation therapy (SBRT). We estimate that around 80% of patients taking the first-line treatment due to relapse of the disease progress on to second-line treatment. Since we know of no approved or emerging therapies for treatment of relapsed/refractory patients, we believe that first-line therapies are often used again in second-line management. Other cancers metastasize to the lungs, including osteosarcoma, breast and colon cancers, for which the relapsed or refractory population is estimated to exceed 8,000 in the US. In addition, there are over 20,000 annual cases of testicular, thyroid, endometrial, renal and cervical cancers which metastasize to the lungs. Given this backdrop, we believe the best initial pathway for Annamycin is to pursue the second-line treatment of STS lung metastasis.

Per the American Cancer Society, in 2024, an estimated66,440 new cases of pancreatic cancer will be diagnosed in the US and 51,750 people will die from the disease. While pancreatic cancer only accounts for 3.3% of all cancer diagnoses, it has the highest mortality rate of all cancers and is the third leading cause of cancer-related deaths in the US, behind lung and colon cancer. The most effective treatment for pancreatic cancer is surgery, but fewer than 20% of cases are eligible for a surgical approach. The 80% of non-resectable pancreatic cancers are typically treated with chemotherapy and other pharmacotherapies. Global sales of drugs used for the treatment of pancreatic cancer, including Abraxane, Lynparza and Tarceva, exceeded $3 billion in 2020, though this figure includes sales for treatment of other cancers as well. Abraxane became generic in 2023 which should impact this number. There is a tremendous amount of clinical development activity in pancreatic cancer, with 551 trials ongoing, of which 32 were late-stage.

Market for Our WP1066 (STAT3) Portfolio

Our active development program for WP1066, has potential applications (among others) in the treatment of brain tumors, another rare disease for which there are few available treatments. The leading brain tumor drug is temozolomide, a drug introduced under the brand name Temodar. In 2012, one industry source reported annual revenues of approximately $882 million for Temodar before the expiration of its patent protection, at which point generic versions of the drug began to enter the market and reduce prices.

WP1066 is our most published asset (over 50 peer reviewed articles), and we believe it is one of very few drug candidates in the development focused on the inhibition of p-STAT3, and that its mechanism of action is unique. Clinical research on WP1066 is currently focused on the treatment of adult GBM and childhood brain tumors, including DIPG. An industry recognized data source in late 2020 estimated that the incidence of primary malignant brain and central nervous system tumors in the US is 7.4 cases per 100,000 person-years. This translates to an incidence of approximately 20,000 cases of malignant brain cancer per year. It is estimated that more than 81,000 people were living with a diagnosis of primary malignant brain and central nervous system tumor in the United States in 2000. In Europe in 2002, 33,000 people were diagnosed with primary brain/CNS cancers, and of which 85-90% are brain tumors. Incidence in Asians is significantly lower and based on the results of several large epidemiological studies, we estimate a Japanese incidence of close to 3,000 a year. Gliomas (mainly glioblastoma and astrocytomas) account for 78% of malignant tumors.

Diffuse Intrinsic Pontine Glioma (DIPG) - also called: Pontine Glioma or Brainstem Glioma – is a type of pediatric (6-9 years old) tumor that starts in the brain stem. These tumors are called gliomas because they grow from glial cells, a type of supportive cell in the brain. DIPG falls into the Glioma staging system, so they can be classified according to the four stages below based on how the cells look under the microscope. The grades are from the least severe to the most severe: Low Grade: Grade I or II means that the tumor cells are the closest to normal; and High Grade: Grade III or IV means that these are the most aggressive tumors. The main issue with DIPG is that most of these tumors are not classified by grade because biopsy or removal of the tumor is not safe because of the location of the tumor, so they are diagnosed by their appearance on MRI. Symptoms usually develop rapidly in the majority of subjects because of the fast growth of these tumors. The most common symptoms are issues related to balance and walking; eyes, chewing and swallowing, nausea and vomiting, headaches and facial weakness or drooping (usually one side). 10-20% of all pediatric gliomas are DIPG. DIPG impacts an estimated 200 to 400 children per year in the US alone. After diagnosis, median survival is usually nine months. Only 10% live for more than two years. When compared to pediatric glioblastoma, the prognosis for DIPG is the worst with less overall survival. There are no effective treatments for DIPG.

We believe there is a significant unmet need for an effective treatment for DIPG. While chemotherapy trials of over 200 drugs have not shown any impact on the disease, a DIPG subject in the first cohort of the Emory University study of WP1066 responded to treatment with both a radiologic reduction in tumor size and a clinical improvement in symptoms. While this is only an “n” of one, we believe the response is important and encouraging, especially since we believe this was a subtherapeutic dose level. In December 2020, we announced that the FDA had approved our request for a "Rare Pediatric Disease" designation for our drug candidate WP1066. The designation may entitle us to receive a transferrable Priority Review Voucher upon approval of an NDA for one of three indications, including DIPG, medulloblastoma and atypical teratoid rhabdoid tumor. We believe that the early activity we are seeing in WP1066 is both surprising and encouraging. The approval of these three Rare Pediatric Disease designations is a reminder of just how important our efforts are to potentially help children with brain tumors. These vouchers are issued upon drug approval of the rare disease indication from the FDA and once issued, can be transferred to other drug developers. PRVs have historically had significant value and management believes have a value up to $100 million or more.

Additionally, WP1220 which is in the WP1066 Portfolio, has shown activity in a clinical trial for the treatment of CTCL. CTCL is a neoplastic transformation of T-lymphocytes and most often occurs between the ages of 40 and 60. Unlike other forms of non-Hodgkin lymphoma, CTCL is initially manifested as skin lesions (mycosis fungoides "MF"), but later stages involve lymph nodes, circulating tumor cells in the blood, as well as viscera. MF is considered a low-grade cutaneous lymphoma which we estimate accounts for more than half of primary CTCLs. Early-stage MF (Stages I and II; ~70% of subjects) is generally treated with skin-directed treatments (topical therapy) using systemic drugs that do not have significant side effects as secondary treatments. Advanced-stage MF requires more aggressive (systemic) therapies due to more extensive involvement of tissues and organs. Treatment is based mainly on a recently published European Organization for Research and Treatment of Cancer (EORTC) guideline. A consensus guideline for clinical endpoints and response criteria to be incorporated into clinical trials was published. However due to the rarity of this disease, it has been difficult to perform randomized studies. There is currently no cure for this disease.

The incidence of CTCL is approximately 16,000 worldwide in 2020 (US + EU 48%) and estimated to be growing to 18,000 by 2026. Asia has the highest incidence (38%). Prevalence is estimated to be 42,000 in US & EU growing to 45,000 with prevalence in Japan growing to a total of 49,000 by 2026. Since this is a chronic disease, we believe introduction of a new topical therapy that is more effective and less toxic than currently available topical drugs (if that is what is shown) would be important to this market. The US market was estimated to represent $40 million in annual sales in 2020, yet consists of technologies that are as much as 40 years old. Our WP1220 proof of concept trial for the treatment of CTCL was conducted in 5 subjects, including the treatment of a total of 11 lesions and concluded with a lesion objective response rate (ORR) of 45%, no adverse events and 55% stable disease, resulting in 100% clinical benefit. 60% of the subjects responded with a PR. We believe that a significant unmet need remains for early stage (Stages IA through IIA) CTCL, and therefore, we believe a meaningful opportunity exists for WP1220.

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Market for Our WP1122 Portfolio

Certain cancers depend heavily on glycolysis and glycosylation for growth and survival. Additionally, viruses depend on glycolysis and glycosylation for infectivity and replication. Glycolysis and glycosylation can be disrupted by using a glucose decoy known as 2-DG. While 2-DG has been shown to be effective in vitro and may have some activity in humans, its lack of drug-like properties limits its efficacy. Based on our preclinical testing in vitro (against cancers and viruses) and in vivo (against certain cancers only), WP1122 appears to improve the drug-like properties of 2-DG by creating a prodrug of 2-DG that reaches much higher tissue/organ concentrations than 2-DG alone. We believe WP1122 should be well suited as a treatment for highly glycolytic cancers such as GBM and pancreatic cancer.

In addition to the market for GBM described above, pancreatic cancer is a rare and difficult to treat form of cancer. Cancers of the pancreas are a very serious health issue in the United States where pancreatic cancer is the fifth leading cause of cancer deaths following breast cancer; lung cancer, colon cancer, and prostate cancer. Due to difficulties in diagnosis, the intrinsic aggressive nature of pancreatic cancers, and the sparse systemic treatment options available, only approximately 4% of patients diagnosed with pancreatic adenocarcinoma will be alive five years after diagnosis.

Our License Agreements

Sponsored Research and License Agreements with MD Anderson

We have licensed all of our technology from MD Anderson, and we also sponsor research there as well. Under license agreements associated with Annamycin, the WP1122 Portfolio, and the WP1066 Portfolio, we are responsible for certain license, milestone and royalty payments over the course of the agreements. Annual license fees, prior to the first sale of a licensed product, can be as high as $0.1 million depending upon the anniversary. Milestone payments for the commencement of phase II and phase III clinical trials can cost as high as $0.5 million. Other milestone payments for submission of an NDA to the FDA and receipt of first marketing approval for sale of a license product can be as high as $0.6 million. Royalty payments can range in the single digits as a percent of net sales on drug products or flat fees as high as $0.6 million, depending upon certain terms and conditions. Not all of these payments are applicable to every drug. Total expenses under these agreements were $0.3 million for the years ended December 31, 2023 and 2022, respectively. For more information about our license agreements, see Footnote 8 - Commitments and Contingencies included in our Consolidated Financial Statements set forth in this report.

We have a sponsored research agreement with MD Anderson that currently runs until the end of December 2025. In addition, the Company also has Sponsored Research Agreements with other universities, one in the US and one in Europe. The expenses recognized under the agreements, mainly related to MD Anderson, were $0.8 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively.

Animal Life Sciences Licensing Agreement

On February 19, 2019, we sublicensed certain intellectual property rights, including rights to Annamycin, our WP1122 portfolio, and our WP1066 portfolio in the field of non-human animals to Animal Life Sciences, LLC (ALI) (the “ALI Agreement”). ALI is affiliated with Dr. Waldemar Priebe, our founder. Under the ALI Agreement, we granted ALI a worldwide royalty-bearing, exclusive license to research, develop, manufacture, have manufactured, use, import, offer to sell and/or sell products in the field of non-human animals under the licensed intellectual property. This license is subject to the terms in the prior agreements entered into by the Company and MD Anderson.

During the term of the ALI Agreement, to the extent we are required to make any payments to MD Anderson pursuant to our license agreements with MD Anderson, whether a milestone or royalty payment, as a result of the research and development or sale of a sublicensed product, ALI shall be required to advance or reimburse us such payments. In further consideration for the rights granted by us to ALI under the ALI Agreement, ALI agreed to pay us a royalty percentage at a rate equal to the royalty rate we owe MD Anderson under our license agreements with MD Anderson plus an additional royalty equal to 5.0% of net sales of any sublicensed products. As additional consideration, ALI issued us a 10% ownership interest in ALI.

With certain exceptions, the ALI Agreement will remain in full force and effect until the expiration of the last patent within the sublicensed patents.

Corporate History

We were founded in 2015 by Walter Klemp (our chairman and CEO), Dr. Don Picker (our Chief Science Officer) and Dr. Waldemar Priebe of MD Anderson (Chairman of our Scientific Advisory Board) in order to combine and consolidate the development efforts involving several oncology technologies, based on license agreements with MD Anderson. Dr. Priebe is a Professor of Medicinal Chemistry in the Department of Experimental Therapeutics, Division of Cancer Medicine, at the University of Texas MD Anderson Cancer Center. This effort began with the acquisition of the Annamycin development project from AnnaMed, Inc. followed by the acquisition of the license rights to the WP1122 Portfolio from IntertechBio Corporation. Further, on behalf of Moleculin, LLC, we entered into a co-development agreement with Houston Pharmaceuticals, Inc., which culminated with the merger of Moleculin, LLC into MBI coincident with our initial public offering allowing us to gain control of the WP1066 Portfolio.

In June 2018, we formed Moleculin Australia Pty. Ltd., a wholly owned subsidiary to oversee pre-clinical development in Australia. The Australian government provides an aggressive incentive for research and development carried out in their country. We believe having an Australian subsidiary could provide a great opportunity for quality, pre-clinical and clinical development and reduce the overall cost of our continued drug development efforts.

On March 22, 2024, we completed a one-for-fifteen reverse stock split of our shares of common stock and proportionate reduction in the number of authorized shares of common stock from approximately 33,000,000 shares to approximately 2,000,000. The reverse stock split was effected in accordance with the authorization adopted by our stockholders at our 2023 special meeting of stockholders.

In July 2021, we formed Moleculin Amsterdam B.V., a wholly owned subsidiary, primarily to act as our legal representative for clinical trials in Europe for Moleculin Biotech, Inc.

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Competition

We operate in a highly competitive segment of the pharmaceutical market, which market is highly competitive as a whole. We face competition from numerous sources including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions. Many of our competitors may have significantly greater financial, product development, manufacturing and marketing resources. Additionally, many universities and private and public research institutes are active in cancer research, and some may be in direct competition with us. We may also compete with these organizations to recruit scientists and clinical development personnel. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

The unmet medical need for more effective cancer therapies is such that oncology drugs are one of the leading classes of drugs in development. These include a wide array of products against cancer targeting many of the same indications as our drug candidates. While the introduction of newer targeted agents may result in extended overall survival, we believe that induction therapy regimens are likely to remain a cornerstone of cancer treatment in the foreseeable future.

There are a number of established therapies that may be considered competitive for the cancer indications for which we intend to develop our lead product candidate, Annamycin. A key consideration when treating AML patients is whether the patient is suitable for intensive therapy. The standard of care for the treatment of newly diagnosed AML patients who can tolerate intensive therapy is cytarabine in combination with an anthracycline (e.g., doxorubicin or daunorubicin), typically referred to as a “7+3” regimen. For some patients, primarily those less than 60 years of age, a stem cell transplant could also be considered if the induction regimen is effective in attaining a CR (Complete Response). The 7+3 regimen of cytarabine in combination with an anthracycline has been the standard of care for decades. A patient not suitable for intensive therapy may be treated with Venclexta in combination with azacitidine, or low-intensity therapy such as low-dose cytarabine, azacitidine or decitabine. It should be noted that, in the United States, the latter are not approved by the FDA for the treatment of AML patients and there remains no effective therapy for these patients or for relapsed or refractory AML, with the exception of some recently approved targeted therapies that have demonstrated a low level of activity for limited subgroups of AML patients. The initial focus for Annamycin development is in patients for whom the standard induction regimen has failed. Also, several major pharmaceutical companies and biotechnology companies are aggressively pursuing new cancer development programs for the treatment of AML.

A number of attempts have been made or are under way to provide an improved treatment for AML. A recently developed liposome formulation of daunorubicin and cytarabine called Vyxeos provides a 5:1 ratio of cytarabine and daunorubicin in each of three injections. When compared with patients receiving 7 injections of cytarabine and 3 injections of daunorubicin (traditional 7+3 induction therapy), patients receiving Vyxeos achieved an average increase in overall survival of approximately 3.5 months (9.5 months compared with 6 months). Despite this extension of overall survival, Vyxeos did not reduce the toxic side effects of daunorubicin (including cardiotoxicity) and it failed to qualify a majority of patients for curative bone marrow transplant. More recently, Venetoclax was approved for the treatment of AML, targeting patients over 75 years of age or not suitable for typical chemotherapy.

Drugs attempting to target a subset of AML patients who present with specific gene mutations, such as IDH1, IDH2 and FLT3, have recently received FDA approval, but by definition serve only subsets of the AML population. Other targeted therapies are currently in clinical trials, as are other approaches that include immunotherapy relying on other biomarkers, other attempts at improved chemotherapy and alternative approaches to radiation therapy. Other approaches to improve the effectiveness of induction therapy are in early-stage clinical trials and, although they do not appear to address the underlying problems with anthracyclines, we can provide no assurance that such improvements, if achieved, would not adversely impact the need for improved anthracyclines. A modified version of doxorubicin designed to reduce cardiotoxicity is in clinical trials for the treatment of sarcoma and, although this drug does not appear to address multidrug resistance and is not currently intended for the treatment of acute leukemia, we can provide no assurance that it will not become a competitive alternative to Annamycin. Although we are not aware of any other single agent therapies in clinical trials that would directly compete against Annamycin in the treatment of relapsed and refractory AML, we can provide no assurance that such therapies are not in development, will not receive regulatory approval and will reach market before our drug candidate Annamycin. In addition, any such competing therapy may be more effective and/or cost-effective than ours.

Soft-tissue sarcomas which have metastasized to the lungs are extremely difficult to treat. There are an estimated 13,600 new cases of soft-tissue sarcoma diagnosed each year, and of those that metastasize, approximately 70% of metastases occur to the lungs. The current standard of care consists of anthracycline therapy or newer-generation drugs such as pazopanib. However, only 20% of patients with STS lung metastases respond to these treatments. There are competitive efforts underway to develop new treatments for STS, including metastatic STS, but few specifically target STS metastases to the lungs.

Non-resectable pancreatic cancers are typically treated with chemotherapy and other pharmacotherapies, including Abraxane, Lynparza and Tarceva. While these products have been commercially successful, their success rates at treating pancreatic cancer are low and fatality rates remain high. This has led to a tremendous amount of clinical development activity in pancreatic cancer, with 551 trials ongoing, resulting in significant competition for pancreatic cancer patients among clinical trials, which could impact development timelines.

Competition for other indications targeted for each of our drug candidates is described above.

Government Regulation

Government authorities at the federal, state and local level in the US, and in analogous levels in other countries extensively regulate, among other things, the development, testing, manufacture, quality control, safety, effectiveness, approval, labeling, packaging, storage, distribution, import, export, record-keeping, reporting, promotion, advertising, distribution, marketing and export and import of products such as those we are developing. The pharmaceutical drug product candidates that we develop must be approved by the FDA before they may be marketed and commercially distributed in the US, and by regulators in other countries before being marketed and commercially distributed there.

In the United States, the FDA regulates pharmaceutical products such as our product candidates under the Federal Food, Drug, and Cosmetic Act and implementing regulations. Pharmaceutical products are also subject to other federal, state and local statutes and regulations. Obtaining regulatory approvals and complying with post-approval requirements generally is expensive, labor-intensive and time-consuming. Failure to comply with the applicable requirements may subject an applicant to administrative or judicial enforcement action, which could include refusal to permit clinical trials to be conducted, refusal to approve an application, withdrawal of an approval, issuance of a warning letter, product recall, product seizure, suspension of production or distribution, fines, refusals of government contracts, and restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

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Development and Approval

The process required by the FDA before a pharmaceutical product may be marketed in the US generally involves the following:

• Review of the product candidate by an FDA advisory committee, if applicable;

The development and approval process, as well as post-approval requirements and restrictions, require substantial resources, attention and effort, and the prospects for approval and continued compliance are inherently uncertain.

Preclinical Testing. Before testing any compound in humans in the US, a company must generate extensive preclinical data. Preclinical testing generally includes laboratory evaluation of product chemistry and formulation, as well as toxicological and pharmacological studies in animals to assess the product’s safety and activity. The preclinical work must be done in accordance with Good Laboratory Practice, or GLP, requirements, the Animal Welfare Act, and other applicable regulations. The sponsor must submit the preclinical data in an IND, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol. Unless the FDA notifies the sponsor otherwise, an IND becomes effective 30 days after receipt by the FDA, and the proposed clinical trial may begin. If it expresses concerns to the sponsor, FDA may impose a “clinical hold,” which precludes beginning the study until the issues are resolved. Similarly, once a study has begun, the FDA may impose a clinical hold suspending further activity, pending resolution of agency concerns. Accordingly, we cannot be sure that submission of an IND will result in a clinical trial beginning or that, once begun, a clinical trial will not be suspended or terminated.

IND Application. Clinical trials involve the administration of the product candidate to healthy volunteers or subjects with the targeted disease under the supervision of qualified investigators, generally physicians not employed by or under the clinical trial sponsor’s control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, how the results will be analyzed and presented and the parameters to be used to monitor subject safety. Each protocol for trials conducted in the US must be submitted to the FDA as part of the IND. Clinical trials must be conducted in accordance with FDA’s good clinical practice, or GCP, regulations, which are intended to safeguard study subjects and support the validity of the resultant data. Further, each clinical trial must be reviewed and approved by an independent institutional review board (IRB) at, or servicing, each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of study participants and for determining that the risks to study participants are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that each study subject (or his or her legal representative) must sign, and is responsible for monitoring the conduct of the study until completed.

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Clinical testing. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

Additionally, post-approval studies, also referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These studies are often used to gain additional information about use of the product for its approved indication, and may at times be required by the FDA as a condition of approval.

Clinical trials require submission of annual progress reports to the FDA, and certain events, especially safety-related information, may require making reports to the FDA, investigators, and/or the IRB, and can lead to suspension, modification, or cessation of ongoing trials. Accordingly, clinical trials may not be completed successfully within any specified period, if at all.

Concurrent with clinical trials, companies usually complete additional animal studies, develop additional information about the physical characteristics of the product candidate and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The sponsor of a clinical trial or the sponsor’s designated responsible party may be required to register certain information about the trial and disclose certain results on government or independent registry websites, such as ClinicalTrials.gov. Additionally, a manufacturer of an investigational drug for a serious disease or condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational drug. This requirement applies on the earlier of the first initiation of a Phase 2 or Phase 3 trial of the investigational drug or, as applicable, 15 days after the drug receives a designation as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.

NDA Submission and Review. The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the pharmaceutical product candidate, proposed labeling and other relevant information are submitted to the FDA as part of an NDA seeking approval to market the product. Under the Prescription Drug User Fee Act (PDUFA), as amended, the submission of an NDA is subject to the payment of a substantial fee, although the fee may be waived under certain circumstances, which may or may not be applicable to us or our partners for any of our product candidates. In addition, under the Pediatric Research Equity Act, as amended, an NDA or supplement to an NDA generally must contain data to assess the safety and effectiveness of the product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers depending on the designated pathway for submission.

The FDA first examines a submitted NDA to determine if the application is sufficiently complete to be accepted for review. If not, the agency may refuse to file the NDA, informing the sponsor of inadequacies to be addressed in a resubmitted application. In this event, the NDA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once an NDA is accepted for filing, the FDA begins an in-depth review of the application. Pursuant to goals established under PDUFA, the FDA aims to complete the review within 10 months of the 60-day filing date, which would be within 12 months of the date of submission, but that deadline is extended in certain circumstances, including by FDA requests for additional information or clarification.

The FDA also has programs intended to expedite the development and review of new drugs intended to treat serious or life-threatening conditions and address unmet medical needs and/or provide benefits over existing therapies. They include:

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The availability of these programs is determined by the facts surrounding each specific product candidate, the disease or condition it is intended to treat, and the availability and characteristics of alternative treatments. Because those factors are subject to change, even if a product or application is granted designation for one (or more) of these programs, the benefits of the program may ultimately not be available. Additionally, the FDA may rescind designations for certain expedited programs (specifically, Fast Track and Breakthrough Therapy) if the agency determines the product candidate no longer meets the criteria for such programs.

The FDA review of an NDA focuses on determining, among other things, whether the proposed product candidate is safe and effective for its intended use, and whether the product candidate is being manufactured in accordance with cGMP to assure and preserve the product candidate’s identity, strength, quality and purity. The FDA may refer applications for novel pharmaceutical products or pharmaceutical products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. The FDA may also determine that a risk evaluation and mitigation strategy (REMS) is necessary to assure the safe use of the product. Among other things, a REMS can include restrictive conditions under which the product may be distributed, which may have a negative impact on the product’s commercial success. If the FDA concludes that a REMS is needed, the NDA sponsor must submit a proposed REMS, and the product will not be approved until FDA determines that the proposed REMS is adequate.

The FDA usually will inspect the facilities at which the product candidate is manufactured, and will not approve the product candidate unless the agency determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trial sites to assure compliance with IND study requirements and GCP. The NDA review process also includes evaluation of the proposed labeling, which is often the subject of significant back-and-forth between the sponsor and the agency.

The NDA review and approval process is lengthy and difficult, and may involve FDA requests for additional data or information, which may extend the process and/or lead the agency to refuse to approve the application. This is the case even if requested data or information are submitted, because data are not always conclusive and the FDA may interpret data differently than the sponsor does. If it decides not to approve an NDA, the FDA will issue a complete response letter, which usually describes the specific deficiencies in the NDA and may include recommended actions the applicant might take for the FDA to reconsider the application. The deficiencies may be minor, for example, requiring labeling changes, or more significant, such as requiring additional clinical trials. An applicant receiving a complete response letter may either revise and resubmit the NDA or withdraw the application.

FDA approval of an NDA may impose significant limitations that could weaken the commercial value of the product. This could take the form of a narrow indication or dosage, requiring the labeling to contain contraindications, warnings or precautions to address perceived safety issues, or mandating a REMS that significantly restricts or imposes burdens on how the product is distributed. Additionally, the FDA may require Phase 4 testing as a condition of approval. In particular, the FDA requires Phase 4 testing as a condition of accelerated approval, and may withdraw accelerated approval of a product if a sponsor fails to timely conduct such studies or if those studies fail to confirm safety or effectiveness. Such post-approval requirements can materially impact a product’s commercial prospects. Post-approval modifications to a drug product, such as changes in indications, labeling or manufacturing processes or facilities, may require development and submission of additional information or data in a new or supplemental NDA, which would also require prior FDA approval.

Regulatory Exclusivities. The Orphan Drug Act provides incentives for the development of drugs intended to treat rare diseases or conditions, which generally are diseases or conditions affecting less than 200,000 individuals in the US. If a sponsor demonstrates that a drug is intended to treat a rare disease or condition, the FDA grants ODD for the product for that use. The benefits of ODD include research and development tax credits and exemption from user fees, including the significant application fee otherwise required with submission of an NDA. A drug that is approved for an indication that is within the product’s orphan drug designation is granted seven years of orphan drug exclusivity (ODE). During that period, the FDA generally may not approve any other application for product with the same active moiety for the same use, although there are exceptions, most notably when the later product is shown to be clinically superior to the product with orphan drug exclusivity. A court decision in 2021 broadened the scope of ODE, but the ultimate impact of that decision is yet to be determined, as FDA has stated that it does not intend to apply the court decision to other products, and the agency has instead continued to apply the narrower scope that has long been the agency’s approach.

ODD and ODE are also available from the European Union (EU). ODD in the EU is generally available for drug products intended to treat life-threatening or chronically debilitating conditions affecting not more than five in 10,000 persons in the EU when the application is made. If the orphan-designated product continues to meet the criteria for orphan designation at approval, the approval for an orphan-designated indication conveys a 10-year exclusivity period, during which the competent authorities in the EU may not accept another marketing authorization application and may not grant another marketing authorization for a similar medicinal product (i.e., a medicinal product with an identical active substance, or an active substance with the same principal molecular structural features and that acts via the same mechanisms) for the same therapeutic indication. The 10-year period can be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for the ODD, which can include if the product is sufficiently profitable not to justify market exclusivity. In the EU, ODE does not preclude granting a marketing authorization for a similar medicinal product for the same therapeutic indication, if that medicinal product is demonstrated to be safer, more effective or otherwise clinically superior, or if the company with orphan drug exclusivity is unable to supply sufficient quantities of the product. Significant revisions to the relevant law in the EU have been proposed and, if adopted, may affect the availability or benefits of ODD or ODE there.

Products that are approved to treat rare diseases that are serious or life-threatening and where the serious or life-threatening manifestations primarily affect patients under the age of 19 years of age may qualify for the Rare Pediatric Disease Priority Review Voucher (RPDPRV) program, in which the product sponsor receives upon approval a voucher for priority review of another product. The voucher can be used by the sponsor for a subsequent application that would not in its own right qualify for priority review, or it may be sold to another company for that use. In either case, a RPDPRV may have significant value. Under the current statutory sunset provisions for the RPDPRV program, after September 30, 2024, FDA may award a voucher for an approved rare pediatric disease product application only if the sponsor has rare pediatric disease designation for the drug, and that designation was granted by September 30, 2024. After September 30, 2026, FDA may not award any rare pediatric disease priority review vouchers. Although there has been discussion of further extending the RPDPRV program, it is unclear if any such legislation will be adopted.

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We received ODD for Annamycin for the treatment of AML in 2018, and in 2020 for the treatment of soft tissue sarcomas, and Fast Track Designation for Annamycin for the treatment of relapsed or refractory AML in April 2019. We received ODD for WP1066 for the treatment of glioblastoma in 2019. If WP1066 is timely approved for the treatment of any of the following pediatric diseases, we may qualify for a Rare Pediatric Disease Priority Review Voucher: ependymoma, medulloblastoma, diffuse intrinsic pontine glioma, or atypical teratoid rhabdoid tumor, provided that related statutory sunset provisions are extended.

The federal Food, Drug and Cosmetic Act (FDCA) also provides for a grant of five-year exclusivity with approval of a product containing a new chemical entity (NCE), which generally means that the active moiety has never before been approved in any drug. During this exclusivity period, which runs from the date of the product’s approval, FDA may not accept for filing any Abbreviated New Drug Application (ANDA) for a generic version of the product or any 505(b)(2) NDA (generally anNDA that relies on data that are not the sponsor’s and for which the sponsor has not obtained a right of reference) for a product with the same active moiety. There are circumstances under which the follow-on application can be submitted at four years, and there are provisions that operate to preclude approval of the application for an additional period of time. Also, NCE exclusivity does not block approval of a “full” NDA (generally, an NDA in which the data are the sponsor’s or for which the sponsor has obtained a right of reference). The NCE exclusivity scheme is complicated and evolving; for that reason, although we believe that some of our products will qualify for five-year NCE exclusivity, we cannot be certain that will receive such exclusivity, or that if we do, the exclusivity will effectively protect our market position.

Hatch-Waxman Act

The Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act) establishes two abbreviated approval pathways for pharmaceutical products that are in some way follow-on versions of already approved products.

Generic Drugs. A generic version of an approved drug is approved by means of an abbreviated new drug application (ANDA), by which the sponsor demonstrates that the proposed product is the same as the approved, brand-name drug, which is referred to as the reference listed drug (RLD). Generally, an ANDA must contain data and information showing that the proposed generic product and RLD (i) have the same active ingredient, in the same strength and dosage form, to be delivered via the same route of administration, (ii) are intended for the same uses, and (iii) are bioequivalent. This is instead of independently demonstrating the proposed product's safety and effectiveness, which are inferred from the fact that the product is the same as the RLD, which the FDA previously found to be safe and effective.

505(b)(2) NDAs. As discussed above, if a product is similar, but not identical, to an already approved product, it may be submitted for approval via an NDA under section 505(b)(2) of the FD&C Act. Unlike an ANDA, this does not excuse the sponsor from demonstrating the proposed product's safety and effectiveness. Rather, the sponsor is permitted to rely to some degree on information from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference, and must submit its own product-specific data of safety and effectiveness to an extent necessary because of the differences between the products. An NDA approved under 505(b)(2) may in turn serve as an RLD for subsequent applications from other sponsors.

RLD Patents. In an NDA, a sponsor must identify patents that claim the drug substance or drug product or a method of using the drug. When the drug is approved, those patents are among the information about the product that is listed in the FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations, which is referred to as the Orange Book. The sponsor of an ANDA or 505(b)(2) application seeking to rely on an approved product as the RLD must make one of several certifications regarding each listed patent. A “Paragraph I” certification is the sponsor’s statement that patent information has not been filed for the RLD. A “Paragraph II” certification is the sponsor’s statement that the RLD’s patents have expired. A "Paragraph III" certification is the sponsor's statement that it will wait for the patent to expire before obtaining approval for its product. A "Paragraph IV" certification is an assertion that the patent does not block approval of the later product, either because the patent is invalid or unenforceable or because the patent, even if valid, is not infringed by the new product.

Regulatory Exclusivities. The Hatch-Waxman Act provides periods of regulatory exclusivity for products that would serve as RLDs for an ANDA or 505(b)(2) application. If a product is a "new chemical entity," or NCE — generally meaning that the active moiety has never before been approved in any drug — there is a period of five years from the product's approval during which the FDA may not accept for filing any ANDA or 505(b)(2) application for a drug with the same active moiety. An ANDA or 505(b)(2) application may be submitted after four years, however, if the sponsor of the application makes a Paragraph IV certification.

A product that is not an NCE may qualify for a three-year period of exclusivity if the NDA contains new clinical data, (other than bioavailability studies) derived from studies conducted by or for the sponsor, that were necessary for approval. In that instance, the exclusivity period does not preclude filing or review of an ANDA or 505(b)(2) application; rather, the FDA is precluded from granting final approval to the ANDA or 505(b)(2) application until three years after approval of the RLD. Additionally, the exclusivity applies only to the conditions of approval that required submission of the clinical data.

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