| Item 1.01 | Entry into a Material Definitive Agreement. |
Vertex Collaboration Agreement
On November 18, 2019, Molecular Templates, Inc. (“Company”), entered into a Master Collaboration Agreement (“Collaboration Agreement”) with Vertex Pharmaceuticals Incorporated (“Vertex”), pursuant to which the parties agreed to enter into a strategic research collaboration to leverage Company’s engineered toxin body (“ETB”) technology platform to discover and develop novel targeted biologic therapies for applications outside of oncology.
Pursuant to the terms of the Collaboration Agreement, Company granted Vertex an exclusive option to obtain an exclusive license under Company’s licensed technology to exploit one or more ETB products that are discovered by Company against up to two designated targets. Vertex has selected an initial target. Vertex has the option to designate one additional target within specified time limits.
Pursuant to the Collaboration Agreement, Vertex will pay Company an upfront payment of $38 million, consisting of $23 million in cash and a $15 million equity investment pursuant to a Share Purchase Agreement (the “SPA”), described further below. In addition to the upfront payments, Company may also receive an additional $22 million through the exercise of the options to license ETB products or to add an additional target. Company shall provide, and Vertex will reimburse Company for, certain mutually agreed manufacturing technology transfer activities.
Company may, for each target under the Collaboration Agreement, receive up to an additional $180 million in milestone payments upon the achievement of certain development and regulatory milestone events and up to an additional $70 million in milestone payments upon the achievement of certain sales milestone events. Company will also be entitled to receive, subject to certain reductions, tieredmid-single digit royalties as percentages of calendar year net sales, if any, on any licensed product.
Company will be responsible for conducting the research activities through the designation, if any, of one or more development candidates. Upon the exercise by Vertex of its option for a development candidate, Vertex will be responsible for all development, manufacturing, regulatory and commercialization activities with respect to that development candidate.
Unless earlier terminated, the Collaboration Agreement will expire (i) on acountry-by-country basis and licensedproduct-by-licensed product basis on the date of expiration of all payment obligations under the Collaboration Agreement with respect to such licensed product in such country and (ii) in its entirety upon the expiration of all payment obligations thereunder with respect to all licensed products in all countries or upon Vertex’s decision not to exercise any option on or prior to the applicable deadlines. Vertex has the right to terminate the Collaboration Agreement for convenience upon prior written notice to Company. Either party has the right to terminate the Collaboration Agreement (a) for the insolvency of the other party or (b) subject to specified cure periods, in the event of the other party’s uncured material breach.
In connection with the Collaboration Agreement, Company and Vertex will enter into the SPA pursuant to which Vertex agreed to purchase 1,666,666 shares of Company’s common stock, par value $0.001 per share, at a price per share of $9.00. The issuance of these shares shall be pursuant to a private placement exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder.
In addition to the SPA, the Collaboration Agreement contemplates that Company will enter into certain other ancillary arrangements with Vertex.
The foregoing description of certain terms of the Collaboration Agreement and SPA does not purport to be complete and is qualified in its entirety by reference to the Collaboration Agreement and SPA that Company intends to file as exhibits to its Annual Report on Form10-K for the fiscal year ending December 31, 2019.
