| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed, on July 12, 2023, Molecular Templates, Inc. (the “Company” or “MTEM”) entered into a Securities Purchase Agreement with certain institutional and accredited investors providing for a private placement of up to $40 million in gross proceeds to the Company in two tranches (the “Private Placement). The initial tranche consisted of the issuance of 2.84 million shares (as adjusted for the Company’s August 2024 reverse stock split) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), or prefunded warrants in lieu thereof (the “Prefunded Warrants”), for gross proceeds of approximately $20 million. The initial tranche of the Private Placement closed on July 17, 2023.
On March 28, 2024, the Company and certain institutional and accredited investors (the “Purchasers”) entered into an Amended and Restated Securities Purchase Agreement (as amended and restated, the “Securities Purchase Agreement”) pursuant to which the Company will issue securities with an aggregate purchase price of $9.5 million on amended and restated second tranche terms. The second tranche of the Private Placement, as amended and restated, will consist of the sale and issuance of (i) 1,209,612 shares (the “Shares”) of Common Stock (and, in lieu thereof, Prefunded Warrants to purchase 2,460,559 shares of Common Stock) for a purchase price of $2.35 per share of Common Stock (the closing price of the Common Stock on March 27, 2024 as reported by the Nasdaq Capital Market) and $2.349 per Prefunded Warrant, and (ii) common stock warrants to purchase up to 7,340,342 shares of Common Stock (or Prefunded Warrants in lieu thereof) at an exercise price of $2.35 per share of Common Stock or $2.349 per Prefunded Warrant (the “Common Warrants”), in exchange for the payment of $0.125 per share of Common Stock underlying the Common Warrants. The Common Warrants will have a term of five years and the Prefunded Warrants will expire when fully exercised in accordance with their terms. The Prefunded and Common Warrants may not be exercised if the aggregate number of shares of Common Stock beneficially owned by the holder thereof immediately following such exercise would exceed a specified beneficial ownership limitation (4.99%/9.99%/19.99%); provided, however, that a holder may increase or decrease the beneficial ownership limitation by giving 61 days’ notice to the Company, but not to any percentage in excess of 19.99%. The Securities Purchase Agreement contains customary representations and warranties and agreements of the Company and the Purchasers and customary indemnification rights and obligations of the parties.
The Shares, Prefunded Warrants, the Common Warrants, and the Shares and Prefunded Warrants issuable upon the exercise of the Prefunded Warrants and Common Warrants, have not been registered under the Securities Act of 1933, as amended, and were offered pursuant to the exemption from registration provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder.
Pursuant to the Securities Purchase Agreement, the Company granted to the Purchasers certain registration rights, pursuant to which, among other things, the Company will (i) file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-3 after the second tranche of the Private Placement to register for resale the Shares (and the shares of Common Stock issuable upon exercise of the Prefunded Warrants and Common Warrants ) issued in the second tranche of the Private Placement, within 30 calendar days following the second tranche closing, and (ii) use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable, and in any event no later than 90 days following the second tranche closing date (or 120 days following the second tranche closing date if the registration statement is reviewed by the SEC). The registration rights covenants are subject to customary terms and conditions for a transaction of this type, including certain customary cash penalties on the Company for its failure to satisfy specified filing and effectiveness time periods.
The second tranche of the Private Placement is anticipated to close on April 2, 2024, subject to the satisfaction customary closing conditions. The Company intends to use the net proceeds from the second tranche of the Private Placement to fund its ongoing clinical studies, working capital and for general corporate purposes. Stifel is acting as the sole placement agent in connection with the Private Placement.
The foregoing description of the material terms of the Securities Purchase Agreement, the Prefunded Warrants and the Common Warrants is not complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, the form of Prefunded Warrant, and the form of Common Warrant, which are filed as Exhibits 10.1, 4.1, and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
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