Moleculin Reports Second Quarter 2021 Financial Results and Provides Programs Update

Moleculin Biotech., (Nasdaq: MBRX) (Moleculin or the Company), a clinical stage pharmaceutical company with a broad portfolio of drug candidates targeting highly resistant tumors and viruses, today announced its financial results for the quarter ended June 30, 2021. The Company also provided an update on its portfolio of oncology drug candidates for the treatment of highly resistant tumors and viruses.

"I am pleased with the progress made over the course of the past quarter, of particular note, in the clinical development program for Annamycin, our next-generation anthracycline. We are committed to advancing our three core technologies to meet the needs in a number of oncology and viral indications. We believe the next 18 months hold a number of key inflection points and value drivers for the Company. We believe Moleculin is well-positioned to continue building momentum and drive shareholder value in the near- and long-term," commented Walter Klemp, Chairman and CEO of Moleculin.

Recent Highlights

Received approval to extend dose escalation in Phase 1/2 European clinical trial evaluating Annamycin for the treatment of acute myeloid leukemia (AML).

Commenced enrollment and dosed the first subject in its U.S. Phase 1b/2 clinical trial evaluating Annamycin for the treatment of soft tissue sarcoma (STS) lung metastases.

Held further meetings with the MHRA in the UK regarding a healthy volunteer trial with WP1122 for the treatment of COVID-19.

Programs Update

Next Generation Anthracycline - Annamycin

Annamycin, the Company's next-generation anthracycline was designed to be noncardiotoxic (unlike all currently approved anthracyclines) and has demonstrated its lack of cardiotoxicity in recently conducted human clinical trials for the treatment of AML. The Company believes that, because of this unique improvement in safety, the use of Annamycin may not face the same usage limitations imposed on doxorubicin. Additionally, Annamycin has been shown in animal models to accumulate in the lungs at up to 30-fold the level of doxorubicin. Annamycin is currently in development for the treatment of AML and STS lung metastases. For more information about the Phase 1b/2 study evaluating Annamycin for the treatment of STS lung metastases, please visit clinicaltrials.gov and reference identifier NCT04887298.

Upcoming Milestones Expectations

H2 2021: Report cohort topline results from the ongoing Phase 1/2 study for treatment of AML and report the study's topline results.

H2 2021: Commence Phase 1/2 study in Europe for the treatment of AML evaluating combination therapy of Annamycin + AraC.

H2 2021: Commencement of an investigator-funded, second Phase 1b/2 clinical trial of Annamycin in sarcoma lung metastases in Europe

First-in-class p-STAT3 Inhibitors - WP1066 and WP1220

WP1066 is one of several Immune/Transcription Modulators, designed to stimulate the immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs) while also inhibiting key oncogenic transcription factors, including p-STAT3 (phosphorylated signal transducer and activator of transcription 3), c-Myc (a cellular signal transducer named after a homologous avian virus called Myelocytomatosis) and HIF-1? (hypoxia inducible factor 1?). These transcription factors are widely sought targets that are believed to contribute to an increase in cell survival and proliferation, and the angiogenesis (coopting vasculature for blood supply), invasion, metastasis and inflammation associated with tumors. They may also play a role in the inability of immune checkpoint inhibitors to affect more resistant tumors. WP1220 is a close analog to WP1066 that the Company has developed as a potential topical therapy for skin-related diseases.

WP1220 was evaluated for the treatment of Cutaneous T-Cell Lymphoma (CTCL) and, based on those results, we are seeking collaborators for future development. WP1066 is currently being evaluated for the treatment of pediatric brain tumors, including Diffuse Interstitial Pontine Glioma (DIPG). Additionally, WP1066 + radiation is being evaluated, pre-clinically, in the treatment of Glioblastoma Multiforme (GBM).

Upcoming Milestones Expectations

H2 2021: File a US Investigative New Drug application (IND) for the treatment of certain adult cancer(s) with WP1066 and identify an institution to commence an associated investigator-funded Phase 1a/1B study.

H2 2021: Continue support of the physician-sponsored pediatric brain tumor clinical trial

H1 2022: Facilitate launch of physician-sponsored Phase 2 study of WP1066 for the treatment of pediatric brain tumors including DIPG.

Actively seek collaboration with a strategic partner in the near term for external funding for the continued development of WP1220 in a Phase 2 clinical trial as a topical therapy for CTCL.

Infectious Disease and Metabolism/Glycosylation Inhibitors- WP1122, WP1096 and WP1097 Portfolio

Moleculin has new compounds designed to target the roles of glycolysis and glycosylation in both cancer and viral diseases. The Company's 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. Recent published research has identified that 2-DG has antiviral potential against SARS-CoV-2 in vitro and, based on publicly available information, a recently completed Phase 2 clinical trial by an unrelated company in India has reported efficacy in COVID-19 patients, resulting in the Emergency Use Authorization of 2-DG by the Drugs Controller General of India. Moleculin believes WP1122 has the potential to become an important drug to potentiate existing therapies, including checkpoint inhibitors. The Company recently engaged in discussions with the Medicines and Healthcare Products Regulatory Agency (MHRA) in the United Kingdom (UK) regarding the potential for beginning clinical trials of WP1122 without the need for additional preclinical animal efficacy models. Based on their initial discussions with the MHRA, the Company believes that a COVID-19 animal model will not be required in order to submit a clinical trial application (CTA) for a Phase 1 clinical trial beginning with healthy volunteers in that country, although no final determination has been made by the MHRA. During the second quarter these discussions continued. Additionally, the Company is in the process of identifying countries where potential future Phase 2 clinical studies could occur. The Company is also engaged in preclinical development of additional antimetabolites (WP1096 and WP1097) targeting glycolysis and glycosylation.

Upcoming Milestones Expectations

H2 2021: Seek to initiate Phase 1a/1b study of WP1122 for the treatment of COVID-19 in the UK.

H2 2021: Potential to launch Phase 2 pivotal study of WP1122 for the treatment of COVID-19 outside the U.S.

H2 2021: File an IND in the U.S. for the treatment of certain cancers such as GBM and pancreatic cancer, with WP1122.

Ongoing preclinical development work in anti-viral indications such as HIV, Zika, and Dengue. IND targeted for 2022.

Summary of Financial Results for Second Quarter 2021

Research and development (R&D) expense was $3.0 million and $3.3 million for the three months ended June 30, 2021 and 2020, respectively. The decrease of $0.3 million is mainly related to the timing of costs incurred in 2020 of producing additional drug product for Annamycin clinical trials.

General and administrative expense was $2.4 million and $1.7 million for the three months ended June 30, 2021 and 2020, respectively. The increase of $0.7 million is mainly related to an increase in consulting and advisory fees and an increase in the Company's corporate insurance.

For the six months ended June 30, 2021 and 2020, the Company incurred net losses of $8.7 million and $11.3 million, respectively, and had net cash flows used in operating activities of $10.4 million and $9.3 million, respectively.

The Company ended the quarter with approximately $79.5 million of cash. The Company believes that this cash is sufficient to meet its projected operating requirements, which include a forecasted increase over its current R&D rate of expenditures, into 2024.