Threshold Pharmaceuticals and Molecular Templates Agree to Combine
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- Published on Friday, 17 March 2017 13:43
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SOUTH SAN FRANCISCO, CA and AUSTIN, TX, USA I March 17, 2017 I Threshold Pharmaceuticals, Inc. (Nasdaq:THLD), a clinical-stage biopharmaceutical company developing novel therapies for cancer, and Molecular Templates, Inc., a privately held biopharmaceutical company, today jointly announced that they have entered into a definitive agreement under which Molecular Templates will merge with a wholly owned subsidiary of Threshold in an all-stock transaction. The transaction will result in a combined company focused on the development of novel treatments for cancer.
Longitude Capital, a U.S. based venture capital firm, will invest $20 million at the close of the transaction, subject to certain conditions, including the receipt of additional equity financing commitments of $20 million.
Molecular Templates' proprietary technology has been used to create a new class of biologic drug candidates known as Engineered Toxin Bodies or ETBs. ETBs have the affinity of an antibody, the ability to induce cellular internalization against non-internalizing receptors, and a novel mechanism of cell-kill (ribosome inhibition) in oncology. Molecular Templates is also using its technology to deliver foreign class I antigens into tumor cells to boost immune recognition of the tumor in a novel approach to immuno-oncology. The Molecular Templates technology has the advantage of being able to generate "off the shelf" therapeutics that do not require patient cell harvesting or transplantation.
Molecular Templates' lead product candidate, MT-3724, is an ETB that targets the CD20 cell surface antigen present in a variety of lymphomas and leukemias. A Phase 1 trial with MT-3724 in relapsed and refractory non-Hodgkin's lymphoma (NHL) has demonstrated good safety and efficacy in elderly, heavily pre-treated patients. In addition to MT-3724, Molecular Templates has preclinical programs targeting HER2 and PD-L1 and has received $15.2 million in new funding commitments from The Cancer Prevention and Research Institute of Texas for its program targeting CD38. Molecular Templates was previously awarded a CPRIT grant for $10.6M that has funded development of its MT-3724 program.
"The merger of our two companies provides Threshold shareholders with a significant equity stake in a biopharmaceutical company with a promising cancer therapy, MT-3724, as well as an innovative and unique technology platform that has generated preclinical drug candidates to treat multiple myeloma, breast cancer and melanoma," said Barry Selick, Ph.D. and Chief Executive Officer of Threshold. "Following an extensive and thorough review of strategic alternatives, we believe this transaction combines promising drug candidates, a solid management team and the resources to create significant value for shareholders and important new cancer therapies for patients."
Eric Poma, Ph.D., Chief Executive Officer of Molecular Templates, commented, "The combined company will have two exciting clinical-stage compounds in evofosfamide and MT-3724 and a unique biological platform with a differentiated mechanism of action in oncology. Longitude's commitment to invest in the company is a strong testament to the promise inherent in the combined companies' clinical assets and technology platform."
Threshold's financial advisor for the transaction is Ladenburg Thalmann & Co. Inc., and Threshold's legal counsel is Cooley LLP. Molecular Templates' legal counsel are Mintz Levin Cohn Ferris Glovsky and Popeo PC and Pillsbury Winthrop Shaw Pittman LLP.
About the Proposed Transaction
On a pro forma basis and based upon the number of shares of common stock to be issued in the merger, current Threshold shareholders would own approximately 34.4 percent of the combined company and current Molecular Templates shareholders would own approximately 65.6 percent of the combined company although the actual allocation will be subject to adjustment based on Threshold's net cash balance.
Concurrent with the execution of the Merger Agreement, Threshold made a bridge loan to Molecular Templates in the principal amount of $2 million. In the event that the transaction does not close by May 31, 2017, Threshold has agreed to make available further funding of up to $2 million on the same terms upon mutual agreement.
The transaction has been approved by the board of directors of both companies. The merger is expected to close in the second quarter of 2017, subject to the approval of the stockholders of each company as well as other customary conditions.
Management and Organization
Eric Poma, Ph.D., Molecular Templates' Chief Executive Officer, will become Chief Executive Officer of the combined company. Following the Merger, the board of directors of the Company will consist of seven seats and will be comprised of two representatives of Molecular Templates; two representatives of the Company, and three representatives to be mutually agreed upon by Molecular Templates and the Company, with the Company's current chairman of the board of directors, Barry Selick, Ph.D., continuing to act as chairman of the board of the Company following the Merger.
Upon closing of the transaction, Threshold will change its name to Molecular Templates, Inc. and plans to change its ticker symbol on the Nasdaq Capital Market to MTEM.
Conference Call and Webcast
Drs. Poma and Selick will host a conference call and simultaneous webcast to discuss the proposed transaction on March 17, 2017, at 8:30 a.m. Eastern Time. The webcast can be accessed on Threshold's website in the Investors/Webcasts section http://investor.thresholdpharm.com/events.cfm. Alternatively, please call 877-397-0286 (U.S.) or 719-325-4745 (international). The conference ID number is 9853266. The webcast will be archived on Threshold's website for at least 30 days.
Evofosfamide (previously known as TH-302) is an investigational hypoxia-activated prodrug of a bis-alkylating agent that is preferentially activated under severe hypoxic tumor conditions, a feature of many solid tumors. Areas of low oxygen levels (hypoxia) in solid tumors are due to insufficient blood vessel supply. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be severely hypoxic. A Phase 1 clinical trial evaluating evofosfamide in combination with the immune checkpoint antibody, ipilumumab, is about to commence at the M.D. Anderson Cancer Center in Houston Texas. At the same time, while the PMDA has just indicated that the current analysis of the MAESTRO data is not sufficient to support the submission of a New Drug Application ("NDA") in Japan, the Company is in ongoing discussions with the PMDA to clarify the scope of an additional study, the results of which may then support the submission of an NDA for evofosfamide in Japan.
About Threshold Pharmaceuticals
Threshold is a clinical-stage biopharmaceutical company focused on the development of drugs and diagnostic agents targeting the tumor microenvironment of solid tumors and hematologic malignancies. This approach offers broad potential to treat a variety of cancers. By selectively targeting tumor cells, we are building a pipeline of drugs that hold promise to be more effective and less toxic to healthy tissues than conventional anticancer drugs. For additional information, please visit the Company's website at www.thresholdpharm.com.
MT-3724 is Molecular Templates' lead drug candidate. MT-3724 completed a Phase 1 clinical trial in heavily pre-treated non-Hodgkin's lymphoma patients at the Memorial Sloan-Kettering Cancer Center, the MD Anderson Cancer Center, the Lineberger Comprehensive Cancer Center at the University of North Carolina, and the University of Arizona. An expansion arm of the Phase 1 study focused on relapsed and refractory diffuse large lymphoma patients is enrolling. More information is available at clinicaltrials.gov.
About Molecular Templates
Molecular Templates is focused on the discovery, development, and commercialization of next-generation immunotoxins called Engineered Toxin Bodies (ETBs) for the treatment of cancers and other serious diseases. Santè Ventures is the lead equity investor in Molecular Templates; Excel Venture Management and AJU IB Life Sciences Overseas Expansion Platform Fund are also equity investors in Molecular Templates. For additional information, please visit the Company's website at www.mtem.com.
SOURCE: Threshold Pharmaceuticals