On February 17, 2021, Molecular Templates, Inc. (the “Company”) filed a preliminary prospectus supplement with the Securities and Exchange Commission under its effective shelf registration statement on Form S-3 (Registration No. 333-242078) (the “Preliminary Prospectus Supplement”) in connection with a proposed registered underwritten public offering of common stock.
The Preliminary Prospectus Supplement contains information relating to recent developments concerning the Company’s business and includes the following disclosure:
Recent Developments
Collaboration Agreement
On February 10, 2021, we entered into a Collaboration Agreement (the “Collaboration Agreement”) with Bristol Myers Squibb Company (“Bristol Myers Squibb”), pursuant to which we and Bristol Myers Squibb agreed to enter into a strategic research collaboration to leverage our ETB technology platform to discover and develop novel products containing ETBs directed to multiple targets.
Pursuant to the terms of the Collaboration Agreement, we granted Bristol Myers Squibb a series of exclusive options to obtain one or more exclusive licenses under our intellectual property to exploit products containing ETBs directed against certain targets designated by Bristol Myers Squibb.
Pursuant to the Collaboration Agreement, Bristol Myers Squibb will pay us an upfront payment of $70 million. In addition to the upfront payment, we may receive near term and development and regulatory milestone payments of up to $874.5 million. We will also be eligible to receive up to an additional $450 million in payments upon the achievement of certain sales milestones, and subject to certain reductions, tiered royalties ranging from mid-single digits up to mid-teens as percentages of calendar year net sales, if any, on any licensed product.
We will be responsible for conducting the research activities through the designation, if any, of one or more development candidates. Upon the exercise of its option for a development candidate, Bristol Myers Squibb will be responsible for all development, manufacturing, regulatory and commercialization activities with respect to that development candidate, subject to the terms and conditions of the Collaboration Agreement.
Unless earlier terminated, the Collaboration Agreement will expire (i) on a country-by-country basis and licensed product-by-licensed product basis, on the date of expiration of the royalty payment obligations under the Collaboration Agreement with respect to such licensed product in such country and (ii) in its entirety upon the earlier of (a) the expiration of the royalty payment obligations under the Collaboration Agreement with respect to all licensed products in all countries or (b) upon Bristol Myers Squibb’s decision not to exercise any option on or prior to the applicable option deadlines. Bristol Myers Squibb has the right to terminate the Collaboration Agreement for convenience upon prior written notice to us. 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. We have the right upon prior written notice to terminate the Collaboration Agreement in the event that Bristol Myers Squibb or any of its affiliates asserts a challenge against our patents.
Update on MT-3724 Partial Clinical Hold and Potential Acceleration of Next-Gen CD20 ETB
As previously disclosed, since November 4, 2020, our MT-3724 clinical studies have been on partial clinical hold as ordered by the U.S. Food and Drug Administration (“FDA”) following a treatment-related fatality in one subject who experienced Grade 5 capillary leak syndrome (“CLS”) in the Phase 2 MT-3724 monotherapy study. At such time, subjects already enrolled in MT-3724 clinical studies who were receiving clinical benefit were permitted to continue dosing but no new patients have been, or will be, enrolled in any MT-3724 study pending resolution of this matter. This partial hold has not resulted in any changes to our trials or plans for our other ETB product candidates, including MT-5111, TAK-169, and MT-6402, all of which utilize a next-generation ETB scaffold that has been designed to reduce or eliminate the propensity for innate immunity, including CLS. To date, we have observed no cases of CLS (any grade) in human subjects who have been dosed with MT-5111. We cannot comment on clinical data from the TAK-169 Phase I study due to confidentiality obligations. We do not yet have clinical data with MT-6402 as the Phase I study of MT-6402 is expected to be initiated in the first half of 2021. As part of our overall investigation into the partial hold on MT-3724, we conducted an investigation into MT-3724 product attributes, and based on our findings, we will propose to implement new drug product manufacturing and release criteria in our partial hold response to FDA. We have determined that the MT-3724 product that has been manufactured to date for use in the MT-3724 studies we plan to continue will not be consistent with the new criteria once it is implemented. Based upon our findings to date and after a thorough risk/benefit assessment, we have decided to discontinue dosing of subjects remaining on our Phase II combination study with MT-3724 and Revlimid® (lenalidomide). Additionally, following our decision to temporarily discontinue dosing for the remaining subject on our Phase II combination study with MT-3724 and chemotherapy (gemcitabine and oxaliplatin, or GemOx), the subject decided in collaboration with their physician to discontinue treatment. Although there have been no signs of capillary leak syndrome toxicity worse than grade 2 in either of these MT-3724 studies, our decision to discontinue dosing in these studies was taken out of an abundance of caution with the study subjects’ health and safety in mind. Further, after a review of the current competitive landscape and following the last subject discontinuing treatment,
