Moleculin Biotech Inc (NASDAQ:MBRX) Just Told Us What We Wanted To Hear

Last time we looked at Moleculin Biotech Inc (NASDAQ:MBRX) we told readers to keep an eye on what we deemed a pivotal event for the company. For those that missed our coverage, we outlined that Moleculin had been traded down on the back of some uncertainty surrounding its ability to demonstrate the safety of its lead development asset and, perhaps as importantly, the ability to do so without diluting shareholders to too high a degree. MBRX Daily ChartAt the time of our noting this, the company had just announced the completion of its efforts to collect said data and a subsequent submission to the FDA as part of an Investigational New Drug Application (IND). We suggested that, with this data submitted, the pressure should lift and the company should start to run.It has taken a little longer than we expected and it seems markets were waiting for a degree of confirmation before committing, but this run is finally here.At the start of September, Moleculin traded for around $2.45 a share. By September 25, this had dipped to $2.38. Yesterday, however, the company ran to intraday highs of $2.83 and settled to close at $2.66 – a close to 12% appreciation on the just mentioned price bottom.So what's causing the run?Well, we thought that there was a pretty strong chance that the FDA would green light the company's IND subsequent to its resubmission (this was an application that was initially submitted back in 2016). We also assumed that wider markets would share this assumption and, in turn, that some speculative volume would likely flow towards Moleculin during the weeks subsequent to resubmission.Instead, however, it turns out that markets were waiting for confirmation from the FDA that it would accept the alterations before committing. For anybody that picked up an exposure in line with our bias, nice move getting in ahead of the crowd. For anybody that missed that chance, however, it's still not too late.As per the latest release, Moleculin just announced that the FDA has accepted its IND, which clears the path for clinical trial initiation in the US. The drug under investigation is called Annamycin and Moleculin is trying to prove that it can be safe and effective in a target indication of relapsed or refractory Acute Myeloid Leukemia (AML). This is a condition with a severe unmet need right now and one that, if Moleculin is successful in the just described aim, could be a real winner for the company longer-term.So what is next?We are looking for the initiation of the study to spark some speculative interest in Moleculin and bring it out from under the radar in the development stage oncology space. The trial will be designed to establish an optimal dose for a phase 2 study and, while we don't have any fixed indication of a start date, there is a good chance we will see enrollment start before the end of the year.As per a recent update from management that came alongside second quarter financials, cash on hand is expected to be sufficient to carry the company through to the end of the second quarter next year. We are assuming that statement, and we are basing this assumption on the $9.3 million recorded at June 30, takes into account the initiation of the upcoming optimal dose trial, meaning there isn't any severe near-term dilution risk.The bottom line here is that this latest development has turned Moleculin from a preclinical entity to a clinical development company in a large oncology indication and this sets it up for considerable upside revaluation heading into the end of 2017 and beyond.Here's our previous coverage of Moleculin. We will be updating our subscribers as soon as we know more. For the latest updates on MBRX, sign up below!Image courtesy of Caroline Davis2010 via FlickrDisclosure: We have no position in MBRX and have not been compensated for this article.