Welcome back. This is Jonathan Aschoff, senior biotechnology analyst at Roth Capital Partners. Who we have now is Walter Klemp, the CEO of Moleculin Biotech. Hey, Jonathan. Um- Thanks for having me. You're very welcome, Wally. You know, last year you were just beginning the MIRACLE phase III trial in relapsed refractory AML. Can you update us on the enrollment progress? There was certainly news about that this week, and what you are seeing as the trial advances toward interim unblinded data? You bet. Maybe just to set the stage, this is a registration-enabling phase III trial that has two parts, part A and part B. Part A has three arms, with one being a control arm using high-dose cytarabine or HiDAC, which is a current standard of care, by the way, and the other two arms are two different doses of Annamycin combined with HiDAC. This approach addresses FDA's Project Optimus guidelines, where they want us to establish an optimum dose before completing part B. The data from both parts are combined for approval purposes, so it's a very efficient trial design. Our recruiting was a bit delayed out of the blocks as we navigated the new CTIS system in the E.U. Once we cleared that, our rate of recruitment has been steadily growing. We just announced yesterday, as you said, that we have recruited our 45th patient in the MIRACLE trial. Now, look, it was just a month ago that we announced the blinded data from the first 30 patients. You can see that the rate of recruitment is picking up big time. Even though the results we announced last month were blinded, they appear to be supportive of what we hope to see when we unblind the 45-patient data. Namely, the historical studies suggest that our control arm should deliver a CR rate somewhere in the low to high teens, and our phase II data suggest we might see something in the 40%-50% range from Annamycin. Now, the blinded data we've seen so far seem consistent with those historical numbers, but of course, that's only speculation. Look, we're only a few months away now from unblinding the data for our first 45 patients, so we don't need to speculate for much longer. Yeah, this is a very, very important catalyst, the most important one since I've been covering you for about six years. Can you explain how the somewhat unique MIRACLE trial design helps accelerate development while still generating the data that regulators are gonna want? Well, several things are important about this study. First, we're talking about AML, a rare disease with a significant unmet need, so we're allowed to use a surrogate endpoint, specifically CR or complete remission. Since our drug is capable of achieving a CR with just one treatment cycle, we know the outcome for any given patient within roughly a month. Next, we have fast track status, which means we can submit a rolling NDA as the study is finishing up. The most unique aspect of the study is our ability to unblind in order to support the dose optimization that I mentioned earlier as part of FDA's Project Optimus. As you know, Jonathan, it's unusual to have such an early read in a phase III trial, so understandably, there's a lot of anticipation here. You know, although you can't provide data right now, can you set investor expectations on what type of data you'll be announcing with the 45 patient interim look? Sure. To start with, we expect about 15 subjects will have been treated in the control arm, and 30 subjects will have been treated with Annamycin, with about 15 of those at 190 milligrams and 15 at 230 milligrams. The numbers are approximate because the randomization process is such that there could be some variation between the three arms. We expect to report CR rates for each arm and to provide overall numbers for median age and what percentage of the overall population came into the trial as what we call venetoclax regimen failures. Now, that last point is important because a lot of AML trials are explicitly excluding ven regimen failures because those patients are really hard to treat, as you know. In our case, we are actually welcoming these patients because our phase II data for these folks was surprisingly strong. At the end of the day, though, it's the primary endpoint that really matters. Specifically, it's the CR rate for patients receiving Annamycin versus the CR rate for control. That's what's gonna translate into approval here. Definitely. Y ou often describe your drug, Annamycin, or its generic name, annamycin, as a next generation anthracycline. What differentiates it from traditional anthracyclines, particularly in terms of the cardiotoxicity you've not shown and potential efficacy? Yeah. Well, to start with, Annamycin is truly a new chemical entity. By the way, it's got patent protection through 2040 and probably extendable into 2045. Now, although it's technically within the class of anthracyclines, its structure and unique lipid-based delivery system are so different that it behaves differently than existing anthracyclines. Look, today's anthracyclines are referred to as pleiotropic, which basically means that they're dirty drugs. They hit a lot of targets that are unintended and undesirable. Most notably, they attack cardiomyocytes, which translates into cardiotoxicity. Even though half of all cancers are treated with an anthracycline, they are so toxic that if a patient is treated over the FDA's lifetime limit, there's a 65% chance of heart damage. Even with those limits in place, 60% of all childhood cancer survivors will develop cardiac dysfunction because of their treatment. Annamycin is much more targeted than today's anthracyclines, so if it doesn't have the same effect, it doesn't have the same effect on cardiomyocytes, and the result has been zero cardiotoxicity in over 100 patients treated to date, and most of those patients were taken over the FDA's lifetime limit. It's also just generally more tolerable, with almost no alopecia, and mucositis can now be completely avoided. Its structure is so different that it not only is not recognized by typical multidrug resistance mechanisms, it avoids cross-resistance with current anthracyclines, with venetoclax, and with cytarabine. Because of this and the fact that it's more targeted, we've seen better efficacy in our last phase II trial than any drug ever approved for relapsed or refractory AML. What would be the Mucositis rate for Anthracyclines as a class? You know, typically, you would expect to see mucositis in the 20%+ range. It would be even worse if not prophylaxed for. There are prophylactic- Right treatments, primarily cryotherapy, but it's pretty common to see, and it's pretty difficult to deal with when it happens. Yeah. It sounds nasty. How do you view the current treatment landscape in relapsed/refractory AML, and where could Annamycin fit among the approved therapies and also among what's in the clinic at present? Right. Well, of course, the conversation has been dominated by gene-targeted therapies. As you know, they just haven't delivered on their promise. We've seen six drugs approved that collectively will help about 18% of relapsed refractory patients. That's a pretty frustrating shortfall. We're now seeing early clinical trials that are experimenting with triplet therapies. Those have a long road in front of them, because of the regulatory hurdle, hurdles that they face. In the end, we think this trend, if it continues, only helps Annamycin. The reason I say that is that some of the best-performing triplet therapies are actually including an Anthracycline. These intense combinations of three drugs or more, that makes toxicity an even bigger issue, right? Regardless, between here and some future that might include triplet therapies, we still have about 60% of the AML population that needs a better option. We think Annamycin can be that option and possibly more. Now, given the current pace of things, we see at least $500 million global market for Annamycin, and that's just in AML. Okay. Possibly it could go to $1 billion. Okay. A nthracyclines are used, you were alluding to this earlier, in a large percentage of cancer treatments, I believe you said about half, limited by cardiotox such that there's even a lifetime limit. If Annamycin is successful, how could a next-generation anthracycline like it change the way that anthracyclines are used across, you know, all of the indications in which they're currently used? Well, because of the severe toxicity of today's anthracyclines, they have typically been used as kind of a one-and-done approach. In AML, you really can't give more than two cycles before reaching the FDA's lifetime limit, and that second cycle is typically far less effective because of acquired resistance, which, of course, Annamycin avoids. The absence of cardiotoxicity really means that Annamycin can now be used as maintenance therapy. With its avoidance of MDR mechanisms, there's a chance for those repeated therapies to do more good. Certainly, our clinical data in soft tissue sarcoma suggests that this may be the case. At the very least, there will be no excuse for ever damaging a child's heart because they needed an anthracycline to treat their cancer. Jonathan, I got to say one of the things we haven't talked about is Annamycin's ability to target organs that current anthracyclines can't. One of the most highly correlated biomarkers for poor outcomes in pancreatic cancer is TOPOII upregulation, and the best-known targeting method for TOPOII is an anthracycline. The problem is that today's anthracyclines can't get to the pancreas in therapeutic levels, but it looks like Annamycin may. That's why Atlantic Health is now sponsoring a clinical trial with Annamycin for the treatment of pancreatic cancer. Well, you know, when it comes to Anthracycline getting places, can you elaborate a little bit upon what you discovered in STS, LM and why the liver met part of it was so important? You bet. Maybe to pull up a little bit, we describe this property as organotropism. Effectively, what we're saying there is that Annamycin has an affinity for certain organs, and fortunately, the organs where Annamycin will hyperaccumulate are really important targets in oncology. To your point about soft tissue sarcoma, most STS patients, the primary disease can be treated usually through excision, but what gets the patient is the mets to the lungs. Almost every sarcoma patient, if they have metastases, it'll be the lungs. Unfortunately, the first line treatment for STS lung mets is, you guessed it, an anthracycline. Works in about 30% of the patients, but it only lasts for a very short period of time, and then they max out. By comparison, in animal models, Annamycin will accumulate in the lungs at about more than 30 times the rate of doxorubicin without any associated pulmonary toxicity. That just makes sarcoma clinicians salivate at the possibility of having that much more opportunity to target lung mets. Just one example, but we also see organotropism of Annamycin in the liver, in the pancreas, in the spleen. Lots of opportunities to target things that up until now haven't been reachable. I mean, do you think that turning over the card in a month, in 45 patients would invigorate or reinvigorate chats with investigators to conduct investigator-sponsored trials where anthracyclines are typically used? With you running this trial, do you have enough drug to allow that to happen- Yeah ....to a useful extent? Actually, we don't need the data card to turn over to increase activity. We've got a lot of inbound requests, and frankly, to your point, we're having to say no to a lot of those inbound requests because of available drug supply. First and foremost, priority one is get this phase III trial done, we don't dare wanna run out of drug because we got over our skis in terms of other opportunities. Right. Now, that said, we do have additional production in the, you know, in the forecast, and so as those production lots come online, we'll be able to free up a bit more. But we have more requests right now for Annamycin trials than we have the ability to supply drug. About those requests, may I ask you, can you help us understand the breadth of indications? Sure .....that these docs are asking about? You bet. The bulk of the requests right now center around sarcomas, both soft tissue and osteosarcomas, and in particular, mets to the lungs, in that particular indication. We've got some inbound interest on colorectal cancer, both the primary tumor and mets to the liver, as well as mets to the lungs. We've got an inquiry relative to renal cell carcinoma. Of course, I mentioned the pancreatic cancer trial that is going on. We have allocated drug for that trial, right? I... To your point, I think when we turn over that data card for 45 patients, it's gonna change the tenor of things, and at that point, we're actually gonna probably have to be a little more insular because there are gonna be more requests. Maybe the thing I didn't mention was we get a lot of compassionate use requests, and those are all over the map in terms of what the indications are. Look, we would love to be able to accommodate those, but right now our job is to get this phase III going, right? Okay. Yeah. Okay. Given the potential, the AML plus opportunity, talk about your current market cap. What milestones could help investors better appreciate the drug's long-term potential and, you know, come on in and help that market cap go up? Right. Well, look, frankly, our market cap is so low, I think it shows that there's a complete disconnect with reality right now. Our phase II data was better than any relapsed or refractory drug approved in the last 15 years. Unlike targeted therapies that work in only a small subset of AML patients, Annamycin's results were mutation agnostic. We don't have market limitations in terms of our ability to tackle this. Our relevant market is bigger than any targeted therapy, yet our valuation is 30 times lower than the lowest valuation out there for targeted therapies. I think it's safe to say there is a real disconnect here. Now, there's no doubt that some of this is the result of perceived financing overhang, but that theory only goes so far. You know, at some point, you have to say that the market just doesn't believe our phase II data, and I can't blame people. It's a small n. The numbers are so much better than the next best thing. It's easy to look at that and look for flaws. You know, did they get lucky? Were they cherry-picking? It is not difficult to cherry-pick in the AML space. I can tell you we didn't, and I can use the numbers to support that statement, but you know, it doesn't really matter. That's all about to change now because we're only a few months away from unblinding the data from our first 45 subjects in a pivotal registration trial, and we're talking about nine different countries already, right? So lots of diversity, no ability to cherry-pick. At that point, it's gonna be hard to ignore our performance, and we think it's gonna become clear that our prospects for approval are high. From there, we have several more milestones that should just add to this momentum. For one, we may have good enough data from the first 45 to file for breakthrough therapy status, with the FDA, and as you probably know, for reference, the approval rate historically for breakthrough therapies is 70%, maybe higher. Also, by the end of the year, we expect to have another unblinding at the 90-patient mark. Yeah. At that point, we will have more patient data than some targeted therapies have been approved with, right? Bottom line, I don't think you can find a small biotech out there that is better positioned for a massive market cap breakout than Moleculin. Yeah. These are exciting days, and we very much, along with you, look forward to this, 45 followed by 90 patients, over the course of this year. Wally Klemp, CEO of Moleculin Biotech, thank you very much. Thank you, John.