Threshold Pharmaceuticals and Molecular Templates Agree to Combine

Threshold Pharmaceuticals, Inc., 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.