Executive Summary / Key Takeaways

• Moleculin Biotech is intensely focused on advancing Annamycin, a next-generation anthracycline designed to be non-cardiotoxic and overcome multidrug resistance, through a pivotal Phase 3 trial (MIRACLE) for relapsed/refractory Acute Myeloid Leukemia (R/R AML).
• Annamycin demonstrated compelling efficacy in Phase 2 (MB-106 trial), achieving a 50% complete remission (CR) rate in R/R AML patients treated with Annamycin plus Cytarabine, significantly higher than the 17-18% CR rate seen with standard high-dose Cytarabine (HiDAC) alone in comparable studies.
• The MIRACLE trial is an adaptive design Phase 3 study comparing Annamycin + Cytarabine to HiDAC + placebo, with planned early unblindings of preliminary data for the first 45 subjects (expected end of 2025) and 75-90 subjects (expected first half of 2026), designed to provide early visibility and potentially de-risk the development pathway.
• Despite promising clinical data and regulatory progress (FDA guidance, EMA approval in 9 countries), the Company faces significant liquidity challenges, requiring approximately $15 million in additional funding to support operations into the first quarter of 2026, posing a going concern risk.
• Management believes MBRX is significantly undervalued compared to peers in the AML space, citing Annamycin's differentiated profile and strong Phase 2 data as potential drivers for substantial value creation and potential future exit opportunities if the pivotal trial is successful.

Setting the Scene: A Focused Fight Against Hard-to-Treat Cancers

Moleculin Biotech, Inc. (NASDAQ:MBRX) is a clinical-stage pharmaceutical company dedicated to developing therapies for hard-to-treat cancers and viruses. Founded in 2015, the company's pipeline is rooted in discoveries licensed from the prestigious University of Texas MD Anderson Cancer Center. Over the years, MBRX has advanced several drug candidates through clinical trials, but its strategic focus has increasingly narrowed, particularly centering on its lead asset, Annamycin. This strategic pivot reflects both the promising data generated by Annamycin and the inherent need for resource prioritization in the competitive and capital-intensive biotech landscape.

The company operates within a single reportable segment focused on the development and commercialization of drug products. Within this segment, MBRX has concentrated its internal resources on Annamycin, while seeking external funding or partnerships to advance other promising programs like the WP1066 and WP1122 portfolios. This focused approach is a direct response to the significant unmet medical needs the company aims to address, particularly in areas like relapsed or refractory Acute Myeloid Leukemia (AML), where current treatment options are limited and outcomes remain poor.

Annamycin: A Next-Generation Anthracycline with a Differentiated Edge

At the heart of Moleculin's investment thesis lies Annamycin, also known by its recently approved International Non-Proprietary Name (INN) naxtarubicin. Annamycin is a next-generation anthracycline, a class of chemotherapy drugs widely used in oncology. However, traditional anthracyclines are limited by two major drawbacks: cardiotoxicity (damage to the heart) and susceptibility to multidrug resistance mechanisms, which can render them ineffective over time.

Annamycin was specifically designed to overcome these limitations. The company highlights its potential lack of cardiotoxicity, a critical differentiator. Across five clinical trials involving 84 subjects treated with Annamycin, there has been no evidence of drug-related cardiotoxicity reported. This includes 56 subjects in internally funded trials treated above the FDA's lifetime maximum anthracycline limit (550 mg/m²), with one subject receiving a cumulative exposure of 3420 mg/m², roughly five times the standard limit, still without cardiotoxicity. This observed safety profile, if confirmed in larger trials, could allow for higher cumulative dosing and potentially broader applicability compared to existing anthracyclines.

Furthermore, Annamycin is designed to avoid multidrug resistance mechanisms, including those that limit the effectiveness of other commonly used AML drugs like Cytarabine and Venetoclax. Preclinical studies have suggested Annamycin's activity against drug-resistant cell lines. This is particularly relevant in the context of relapsed/refractory AML, where patients have often developed resistance to prior therapies.

The tangible benefit of these design features was demonstrated in the company's Phase 2 MB-106 trial. In R/R AML patients treated with Annamycin in combination with high-dose Cytarabine (AnnAraC), the trial achieved a 50% complete remission (CR) rate. This compares favorably to the approximately 17-18% CR rate observed in control arms using HiDAC alone in prior large, comparable studies (Mirros and Classic 1 trials). Management emphasizes this represents a performance delta of "more than double" or "almost three times greater" than the expected standard of care. Preliminary data from MB-106 also showed a 60% CR/CRi rate in patients who had failed Venetoclax regimens, a particularly difficult-to-treat population, which management states is "more than 4 times greater than published historical rates" for this group.

These quantifiable advantages – a potentially non-cardiotoxic profile, the ability to overcome resistance, and superior efficacy data in Phase 2 – form the core of Annamycin's competitive moat. They suggest the drug could fill a significant unmet need in R/R AML, potentially becoming a preferred treatment option, especially for patients previously treated with or resistant to other therapies, including Venetoclax failures. The recent granting of two new US patents covering methods of making liposomal Annamycin, extending coverage to June 2040, further strengthens the proprietary position around this lead asset.

Beyond AML, the company believes Annamycin has potential applications in other cancers where anthracyclines are used, including soft tissue sarcoma (STS), pancreatic cancer (supported by recent preclinical data), and potentially a wide range of other solid tumors and liquid cancers, including childhood cancers. Management has stated the potential market growth beyond AML could be "in the range of 20 times that which would come just from AML," highlighting the significant long-term opportunity if Annamycin's profile translates to success in these additional indications.

Navigating the Competitive Currents in AML

The AML treatment landscape is dynamic, populated by both large pharmaceutical players with established products and smaller biotechs developing novel therapies. Key competitors include large companies like AbbVie (ABBV) with Venetoclax, Pfizer (PFE) with Mylotarg, Bristol-Myers Squibb (BMY) with Onureg, and Jazz Pharmaceuticals (JAZZ) with Vyxeos. These companies command significant market share and possess vast financial resources, global distribution networks, and established relationships with healthcare providers.

AbbVie's Venetoclax, in particular, has become a dominant force in AML combination therapies, generating billions in annual revenue. However, MBRX positions Annamycin as a potential solution for patients who fail Venetoclax regimens, an area with dismal outcomes according to published literature. Annamycin's ability to avoid cross-resistance, unlike some other agents, is a key competitive factor here.

Compared to these larger, diversified pharmaceutical companies, MBRX is a focused, clinical-stage entity with no commercial revenue. While competitors like ABBV, PFE, BMY, and JAZZ exhibit strong financial metrics like positive gross, operating, and net margins, and significant cash flow generation, MBRX operates at a loss, with negative margins and substantial cash burn from R&D activities. For the three months ended March 31, 2025, MBRX reported a net loss of $6.4 million, with R&D expenses of $3.4 million and G&A expenses of $2.5 million. The company's accumulated deficit stood at $159.8 million as of March 31, 2025.

Despite the disparity in scale and financial health, MBRX's competitive strategy hinges on Annamycin's potentially superior efficacy and safety profile in specific, high-unmet-need patient populations within AML, particularly R/R AML and Venetoclax failures. The company's Phase 2 data suggests a performance level significantly exceeding currently approved therapies in this setting. While competitors have established market positions, MBRX aims to disrupt this landscape by offering a treatment that is potentially safer (non-cardiotoxic) and more effective for patients who have exhausted other options.

MBRX's competitive advantages, or moats, are primarily its proprietary technology (Annamycin's unique design and formulation) and its strategic partnerships, particularly the foundational relationship with MD Anderson. These factors enable the company to pursue a differentiated approach targeting specific biological mechanisms (avoiding resistance, lack of cardiotoxicity) that competitors' current offerings may not fully address. However, MBRX's competitive disadvantages include its limited financial resources, high cash burn, and the inherent operational challenges of conducting global clinical trials compared to the vast infrastructure of large pharma. The need for significant external funding to advance its pipeline is a constant vulnerability.

The company's strategy to seek out-licensing or outsourcing opportunities for marketing and sales, if Annamycin is approved, acknowledges its limitations in building a large commercial infrastructure and positions it to potentially leverage the scale and reach of a larger partner to compete effectively post-approval.

The Pivotal MIRACLE Trial: A Clear Path, Critical Milestones

With compelling Phase 2 data in hand, Moleculin's strategic focus has culminated in the initiation of the pivotal Phase 3 MIRACLE trial (MB-108) for Annamycin in combination with Cytarabine for R/R AML. This global, adaptive design study is intended to serve as the basis for regulatory approval. The trial compares AnnAraC against a control arm of high-dose Cytarabine plus placebo, a standard of care in this setting, leveraging the significant efficacy delta observed in Phase 2.

The trial design incorporates an adaptive approach with a lead-in Part A (Phase 2B) randomizing patients to the control arm or one of two Annamycin doses (190 mg/m² or 230 mg/m²), as recommended by the FDA under its Project Optimus initiative to determine the optimum dose for Part B. Part B (Phase 3) will then continue with the selected optimum dose against the control arm, enrolling approximately 222 additional subjects. The primary efficacy endpoint is the rate of complete remission (CR) at approximately day 35.

A key feature of the MIRACLE trial, highlighted by management as a significant de-risking factor for investors, is the plan for early unblindings of preliminary data. The first unblinding is expected after the first 45 subjects have completed their efficacy analysis (targeted by the end of 2025), and a second unblinding is planned after 75-90 subjects (expected first half of 2026). These interim looks are intended to provide early visibility into the drug's safety and efficacy performance, allowing stakeholders to assess how the trial is tracking and potentially accelerating decision-making regarding the trial's path forward.

Operational progress on the MIRACLE trial has been a primary focus for the company. As of May 2025, the trial had selected 38 sites globally, with the first patient dosed in April 2025. Regulatory approvals have been secured in key regions, including the EMA's approval in all nine submitted EU countries (Belgium, Czechia, France, Germany, Italy, Lithuania, Poland, Romania, Spain) in May 2025, following earlier US IND amendment feedback from the FDA that allowed a reduction in the Part B size. While EMA approval for Part B is conditional on submitting GLP study results, management does not view this as a barrier to the overall timeline. The company is actively working to harmonize US and EU protocols and accelerate site activation and recruitment.

Outlook and Guidance: Milestones and Funding Needs

Moleculin's outlook is heavily tied to the successful execution of the MIRACLE trial and achieving its key data milestones. Management has provided specific guidance on these upcoming events:

• End of 2025: Expected initial unblinding of preliminary safety and efficacy data for the first 45 subjects in the MIRACLE trial.
• First Half of 2026: Expected second unblinding of data for 75-90 subjects, intended to select the optimum dose for Part B.
• May/Early June 2025: Expected KOL call to review final topline data from the completed MB-107 trial in STS lung metastases.
• Second Half of 2025: Expected results from preclinical studies of the WP1066 IV formulation at Emory University.
• Second Half of 2028: Targeted NDA submission for R/R AML based on the MIRACLE trial, potentially for accelerated approval based on the CR endpoint.

Financially, the company's guidance highlights its immediate capital needs. As of March 31, 2025, MBRX had $7.7 million in cash and cash equivalents. Management stated this cash is sufficient to fund planned operations into the third quarter of 2025. To support the MIRACLE trial and operations well into the first quarter of 2026, the company needs to raise approximately $15 million in additional funding. This guidance takes into account expected cash outlays, including a projected cash burn of around $5 million per quarter for the remainder of 2025, increasing to $7-8 million per quarter in 2026 as manufacturing requirements for a potential NDA increase.

The company intends to seek this funding through various means, including equity or debt offerings, collaborations, or licensing arrangements. The ability to secure this funding on a timely basis is critical and directly impacts the company's ability to continue operations and execute its clinical plan.

Beyond Annamycin, the company continues to support the WP1066 program, with an externally funded Phase 1B/2 trial in glioblastoma actively recruiting at Northwestern University. The termination of certain WP1122 licenses reflects a strategic decision to focus internal resources on Annamycin, while remaining open to advancing other programs through external partnerships or investigator-initiated studies. The company hopes to leverage the positive MB-107 STS data to potentially initiate a pivotal investigator-sponsored trial in Europe later in 2025.

Risks and Challenges

Investing in a clinical-stage biotech like MBRX involves significant risks. The most immediate and pressing risk is the company's liquidity and ability to obtain necessary additional financing. The going concern disclosure in the 10-Q underscores this challenge. Failure to raise the required $15 million could severely impact the company's ability to fund the MIRACLE trial and continue operations.

Regulatory risk is also inherent. While the company has received positive feedback and approvals to proceed, the FDA or other regulatory agencies could still place the MIRACLE trial on clinical hold if safety concerns arise. The EMA's requirement for GLP studies before initiating Part B adds a specific hurdle that must be cleared. Harmonizing protocols across different regions also presents operational complexity.

Clinical trial execution risks, such as slower-than-expected patient recruitment, could delay key data readouts and extend the timeline to potential approval, increasing costs and exacerbating funding challenges. The SEC subpoena received in March 2022, while not currently involving officers or directors and with the company believing in the accuracy of its prior disclosures, remains an unresolved matter with unpredictable timing and potential outcomes, incurring ongoing legal expenses.

Furthermore, the competitive landscape is challenging. While Annamycin shows promise, it must ultimately demonstrate statistically significant superiority in the pivotal trial and gain market acceptance against established therapies and other emerging treatments. The success of other pipeline programs (WP1066, STS) is less certain and dependent on external factors or future partnerships.

Valuation Perspective

Management has consistently articulated the view that Moleculin is significantly undervalued relative to its peers in the AML space, particularly given Annamycin's Phase 2 data and its advancement into a pivotal Phase 3 trial. They point to multi-billion dollar valuations and acquisitions of companies or assets with AML drugs, some of which target smaller patient populations or have demonstrated lower efficacy than Annamycin's Phase 2 results.

The argument is that if Annamycin's Phase 2 performance is replicated in the MIRACLE trial, the drug's potential as a non-cardiotoxic, resistance-overcoming therapy for a high-unmet-need population could justify a valuation orders of magnitude higher than the current market capitalization. The upcoming interim data readouts from the MIRACLE trial are seen as critical catalysts that could provide the market with the necessary evidence to re-evaluate MBRX's potential.

While current financial metrics reflect a pre-revenue, R&D-intensive stage, the investment thesis hinges on the potential future value unlocked by Annamycin's clinical success and subsequent commercialization or partnership. The significant disparity in valuation compared to peers, despite what management presents as superior clinical data, forms the basis of the perceived opportunity for investors.

Conclusion

Moleculin Biotech stands at a critical juncture, intensely focused on its lead asset, Annamycin, and the pivotal Phase 3 MIRACLE trial in R/R AML. The company's narrative is one of leveraging differentiated technology, born from a strong academic partnership, to address a significant unmet medical need with a drug that has shown compelling Phase 2 efficacy and a potentially game-changing safety profile (lack of cardiotoxicity). The strategic decision to prioritize Annamycin, supported by regulatory progress and an adaptive trial design with early data visibility, aims to accelerate the path to potential approval.

However, this opportunity is juxtaposed with substantial financial risk. The company's limited cash runway necessitates significant near-term funding, and its ability to secure this capital is paramount. The success of the MIRACLE trial is not guaranteed, and other risks inherent in drug development and the competitive landscape persist.

For investors, the story of MBRX is a high-stakes play on Annamycin's potential to disrupt the AML market. The upcoming data readouts from the MIRACLE trial by the end of 2025 and in the first half of 2026 represent critical inflection points that will provide key insights into the likelihood of clinical success and could significantly impact the company's valuation and future trajectory. The investment thesis rests on the belief that Annamycin's differentiated profile and Phase 2 performance can translate into a successful Phase 3 outcome, unlocking substantial value currently not reflected in the company's market capitalization, provided the necessary funding can be secured to reach these milestones.