Moleculin Biotech (MBRX) Stock: A Good Story To Tell

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Moleculin Biotech Inc (NASDAQ: MBRX)

Moleculin Biotech is another one of those promising small biotechs that have compiled a compelling set of clinical data and have a solid pipeline and an experienced management team focused on getting its products through trials. But, like so many of these promising companies that are on the precipice of dealing out some significant and game-changing data, they get unmercifully beaten down in price and stay unfairly valued at the lower depths of the trading range.

Moleculin Appears Poised To Trend Higher

MBRX has been churning relatively well in the $3.00 – $3.50 range for the past two weeks, with a spike higher in late October after the company announced positive data related to Annamycin, their leading drug candidate to treat Acute Myeloid Leukemia. MBRX stock spiked as high as $4.37 on the day, since retreating down to its current price per share of $3.34.

MBRX has been trending higher since October 24th on slightly higher than average volume. Based on the trading action and relative strength of the stock in the past two weeks, and taking historical data into account as well, MBRX finally appears poised to trend higher. Investors should take note, trending higher does not mean a straight line up from lower left to upper right. Expect to see moves higher, consolidation, and retracement. This would be healthy action for the stock and would make for a stronger uptrend pattern to remain in place. Higher highs, higher lows – the best four words for a stock in recovery mode.

Be Interested In Annamycin

As investors, MBRX offers several compelling reasons to consider the stock as part of their small cap portfolio. A key factor discussed today is Annamycin.

The lead drug, Annamycin, is an anthracycline intended for the treatment of relapsed or refractory AML. Anthracycline, which is used mostly in combination therapies, has been used to treat AML from as far back as 1970. Unfortunately, even while enormous advances have been made in the treatment of cancer and other diseases, the advancements to treat AML with anthracycline has not improved very much at all. In fact, it is estimated that the use of anthracycline in combination therapy delivers the same 20% success rate for induction therapy as back in 1970. This is where Annamycin can make the difference.

Currently, the only reliable option for acute leukemia patients is a bone marrow transplant, which has proven to be successful in treating a significant number of patients. However, to get to the point where a patient can qualify for the bone marrow transplant, they must be treated with the anthracycline compound, a treatment called induction therapy. And with doxorubicin being the current drug at hand, annamycin can certainly prevail in capturing an enormous piece of market share.

Annamycin Changing The Treatment Landscape

Currently, patients that are undergoing induction therapy treatment to qualify for a bone marrow transplant are using doxorubicin, a leading anthracycline that has recorded sales in excess of $700 million dollars per year. Without dismissing the importance of a drug like doxorubicin, the use of the drug does not come without serious cardiotoxic ramifications. Thus, while effective during induction therapy, the cardiotoxic agents in doxorubicin can cause severe damage to the heart, which then complicates the level of dosage a patient can receive, and that can further cause an arduous program of treatment with limited efficacy.

Further, the tumor cells being treated in a patient have a resistance mechanism allowing them to be capable of absolving themselves of the current anthracycline, which then limits the effectiveness of the induction therapy. This is currently the case with doxorubicin, a good drug that is losing its effectiveness to treat leukemia in a broad base of patients.

The Annamycin Difference

MBRX is demonstrating a huge benefit and industry alternative by using Annamycin. From a clinical perspective, the drug is impressive.

In a MBRX phase I study, annamycin demonstrated efficacy in 8 of 16 patients, with 6 having a complete leukemic clearing blasts. A 30-patient phase I/II study in acute lymphocytic leukemia demonstrated similar efficacy.

To simplify the benefits of annamycin in comparison to doxorubicin and other approved induction therapy drugs, I can break it down simply and provide a basis for my interest in the stock:

  • annamycin has demonstrated meaningful clinical activity in patients for which there are no current effective therapies
  • annamycin has been able to avoid the multi-drug resistance mechanisms
  • it has been demonstrated to be non-cardiotoxic in animal models against control tests using doxorubicin
  • annamycin has demonstrated to be more potent that any other leading drug to treat the AML cell lines
  • it meets a serious unmet medical need
  • it can qualify for Orphan Drug designation
  • it may qualify for a Special Protocol Assessment, providing for accelerated approval

Clearly, annamycin can be in a position to squeeze doxorubicin out of the market. And, if the trials continue to progress as successfully, an expedited path is possible.

Now, On To The Rest Of The Show: Things You Really Want To Know

Providing a back story for MBRX is important, but I realize that in today’s trading environment, many investors want to get straight to the meat and potatoes. Why should I buy the stock? And is the investment safe?

When Considering An Investment In MBRX, Take Into Account The Following:

MBRX completed a successful public offering and acquired worldwide rights to its WP1066 drug portfolio. MBRX has demonstrated the powerful performance of annamycin in a combination therapy, setting the stage for its planned phase IIb trial design, and MBRX has expanded its research sponsorship at MD Anderson Cancer Center, which facilitates access to grant funding and the accessibility to cutting edge research tools and capabilities.

Prior to the end of 2016, investors can expect several milestones. These are items that MBRX specifically guided for in its 10Q for period ending June 30, 2016:

  • apply for Orphan Drug status and validate the potential for accelerated approval for annamycin
  • leverage results from a strong phase IIb trial into accelerated approval based on the unmet medical need and Orphan Status
  • prepare the next stage of study for annamycin in a phase IIb trial for liposomol annamycin, intended to treat relapsed or refractory acute myeliod leukemia
  • continue to develop and remain focused on a strong and developing pipeline

Moleculin Biotech is hitting on all cylinders, and the growth potential is strong. The strength of annamycin, coupled with its superior performance in comparison to currently available treatments, limits downside risk at these levels. MBRX has recently completed a successful cash raise and has sufficient funds to pursue all of its planned operations for at least the next twelve months, limiting near-term dilution risk and providing ample time for the stock price to catch up with its success in the clinic.

The company believes, as do investors, that annamycin can be a game-changing advancement in the way acute leukemia can be treated. The company has posted statistically relevant data and management is fully focused on capitalizing on the potential to prove annamycin as a new class of drug to treat acute leukemia.

Investors have an opportunity to grow with MBRX, potentially catching this uptrend in price to a level more appropriate for a company advancing into a phase IIb trial, especially with the data already received and published.

With near-term dilution not a factor, and with ample cash on hand, I expect that the trend will continue higher. The stock traded well above $5.00 a share with less data in hand. As is typical, the stock is retreating after a cash raise and with volume settling down quite a bit since the end of last week, I expect that the uptrend will remain technically sound.

Based on the near-term catalysts for MBRX, I have a near-term target of $4.50 based on the annamycin product alone. Factor in additional pipeline advances and I believe that the stock can revisit the $6.00 level prior to year end, despite tax-selling pressure that usually rears its ugly head.

Moleculin Biotech is a good company that is progressing well, with an opportunity for fast track approvals and Orphan Drug protection. At these levels, MBRX is very interesting and worthy of investor interest. As always, stay diversified and keep track of your holdings that have near-term milestones planned.

MBRX is a “Soulstring Select” stock and has the makings to do quite well in the near term.

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[Image Courtesy of Flickr]

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