Item 1.01 Entry into a Material Definitive Agreement.
Takeda License Agreement
On September 18, 2018, Molecular Templates, Inc. (the “Company”) entered into a development collaboration and exclusive license agreement (the “License Agreement”) with Millennium Pharmaceuticals, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited (“Takeda”), for the development and commercialization of products incorporating or comprised of one or more CD38SLT-A fusion proteins (“Licensed Products”) for the treatment of patients with diseases such as multiple myeloma.
Pursuant to the License Agreement, the parties will initiallyco-develop one or more of the Licensed Products up to and including Phase Ia clinical trials, with the Company having an option to continue toco-develop the Licensed Products following Phase Ia clinical trials. The Company may exercise itsco-development option within a specified time period following completion of the Phase Ia clinical trials with no additional fee by providing written notice of exercise to Takeda, provided the Company has paid allco-development costs due pursuant to the License Agreement as of the date of such exercise. Pursuant to the terms of the License Agreement, Takeda will be responsible for all regulatory activities and commercialization of the Licensed Products. The Company has granted Takeda specified intellectual property licenses to enable Takeda to perform its obligations and exercise its rights under the License Agreement, including exclusive license grants to enable Takeda to conduct development, manufacturing, and commercialization activities pursuant to the terms of the License Agreement.
Pursuant to the License Agreement, the Company will receive an upfront payment of $30 million and, if the Company exercises itsco-development option and funds its share of development costs, it may receive up to an additional $307.5 million in milestone payments upon the achievement of certain development and regulatory milestone events and up to an additional $325 million in milestone payments upon the achievement of certain sales milestone events. If the Company does not exercise itsco-development option, it may receive up to an additional $162.5 million in milestone payments upon the achievement of certain development and regulatory milestone events and up to an additional $175 million in milestone payments upon the achievement of certain sales milestone events. The Company will also be entitled to receive tiered royalties, subject to certain reductions, as percentages of annual aggregate net sales, if any, of Licensed Products. The royalty percentages would range from low double-digits to low twenties if the Company exercises its option toco-develop, and from high-single digits to low teens if the Company does not exercise its option toco-develop.
The parties will share inco-development costs in accordance with the terms of the License Agreement, and Takeda will be responsible for all costs incurred commercializing the Licensed Products.
Unless earlier terminated, the License Agreement will expire upon the expiration of thelast-to-expireco-development royalty term (or royalty term, if applicable) for a Licensed Product. Takeda has the right to terminate the License Agreement at any time upon no less than ninety days’ prior written notice to the Company. Either party may, subject to specified cure periods, terminate the License Agreement in the event of the other party’s uncured material breach, and either party may terminate the License Agreement under specified circumstances relating to the other party’s insolvency.
The License Agreement contemplates that the Company will enter into certain ancillary arrangements with Takeda, including a clinical supply agreement and a quality agreement.
CPRIT Grant Contract
On September 18, 2018, the Company entered into a Cancer Research Grant Contract (the “Agreement”) with the Cancer Prevention and Research Institute of Texas (“CPRIT”), in connection with a grant of approximately $15.2 million awarded by CPRIT to the Company in November 2016 to fund research of a cancer therapy involving a CD38 targeting ETB(MT-4019) (the “Award”). Pursuant to the Agreement, the Company may also use such funds to develop a replacement CD38 targeting ETB, with or without a partner. The Award is contingent upon funds being available during the term of the Agreement and subject to CPRIT’s ability to perform its obligations under the Agreement as well as the Company’s progress towards achievement of specified milestones, among other contractual requirements.
