Moleculin Biotech Inc (NASDAQ:MBRX): Here's What's Next

When we last looked at Moleculin Biotech Inc (NASDAQ:MBRX), the company was down a little over 50% from late June highs and wider market sentiment surrounding the stock was decidedly negative. In our coverage, we noted that this dip in sentiment (and the concurrent dip in share price) was an opportunity to pick up shares at a discount ahead of a recovery and a longer-term upside reevaluation.Our thesis was relatively simple: the company had long been the subject of downside pressure based on its share price being below the one dollar NASDAQ minimum bid threshold and this brought with it the risk of a reverse split.When traders take a look at a stock at this end of the market and decide that the company may effect a reverse split near term, it adds a considerable amount of risk to the equation and will often put said investors off pulling the trigger on exposure, whatever the fundamental picture looks like.Towards the end of June, a run up to the above-mentioned highs helped to put the company back in line with NASDAQ requirements and – earlier this month – we got formal confirmation that the threat of delisting was off the table. In line with this confirmation, the threat of a reverse split also lifted, meaning the risk that served as prohibitive to what likely amounted to a large portion of potential shareholders was no longer in place.We opined that this would result in a wave of speculative volume flowing into the stock and that share price should appreciate near-term (and longer-term) as this risk lifted and markets focused purely on the fundamental side of the company as opposed to its capital structure.Turns out we were right.At last close, the company went for a little over two dollars a share. That's a 26% premium to the $1.60 at which we put forward our expectations.So what's next?We just got a bit of news (and this is the news that is the driving force behind our coverage of this one today) that should serve to set up a number of catalysts for Moleculin across the coming 12 months.Specifically, the company announced that it is working in collaboration with The University of Texas System on behalf of the M.D. Anderson Cancer Center to provide support to help accelerate the start of a physician-sponsored Investigational New Drug (IND) application, which will look at Moleculin's candidate, WP1066, as a potential asset for the treatment of adult glioblastoma (brain tumors).This IND is one that has previously suffered a bit of a setback on the back of the FDA requesting further data rooted in the mechanics of the drug, but once it is green-lighted, it opens the door to a phase 1 human trial for the drug in question. Glioblastoma is a very serious, but quite common (as far as cancers go), condition, and it is currently attracting a fair amount of media attention on the back of the news that Senator John McCain is suffering from this particular type of cancer.This increased media attention should put a spotlight on the trial in question as when it initiates and the mechanism of action of the drug itself, and specifically, the uniqueness of said mechanism of action, should serve to compound interest in the trial and the asset as it moves along the development pathway.For those interested in the science, the drug is a STAT3 inhibitor, which means it is designed to prevent tumors (in this instance, brain tumors) from using the STAT3 pathway to evade the immune system. This should translate to the immune system being able to target and kill the cancer cells associated with the tumor in question and, as a bonus, the drug also has a direct cell-killing effect which can help to block tumor progression.That's the upside.Keep in mind, however, that there is a good chance we will see a raise from this company near term. The recent share price run makes a capital raise relatively attractive and any equity issued on the back of said raise is going to be dilutive to current shareholders.It's far from prohibitive to an exposure (there is more than enough upside on offer to negate any dilutive impact) but it's a necessary consideration ahead of taking a position.Check out our previous coverage of this one here.We will be updating our subscribers as soon as we know more. For the latest updates on MBRX, sign up below!Image courtesy of arthurmlee via FlickrDisclosure: We have no position in MBRX and have not been compensated for this article.