Molecular Templates, Inc. Reports Second Quarter 2020 Financial Results

Rhea-AI Summary

Molecular Templates reported Q2 2020 financial results, showing a net loss of $31.2 million, or $0.68 per share, compared to a loss of $9.2 million in Q2 2019. Revenue increased to $6.9 million from $5.4 million year-over-year. The company secured a $45 million debt facility and raised $50 million via an ATM. Molecular Templates is advancing multiple ETB programs, with interim data expected in H2 2020 for MT-3724 and MT-5111. Challenges from COVID-19 have slowed patient enrollment in trials, but manufacturing operations remain uninterrupted.

Positive

• Revenue increased from $5.4 million in Q2 2019 to $6.9 million in Q2 2020.
• Successful financing with $50 million raised through ATM and $45 million debt facility.
• Ongoing progression with multiple ETB programs and anticipated data releases.

Negative

• Net loss increased to $31.2 million in Q2 2020, compared to $9.2 million in Q2 2019.
• COVID-19 has significantly slowed patient enrollment in MT-3724 Phase 2 studies.

AUSTIN, Texas, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Molecular Templates, Inc. (Nasdaq: MTEM, “Molecular Templates,” “MTEM” or “the Company”), a clinical-stage biopharmaceutical company focused on the discovery and development of proprietary targeted biologic therapeutics, engineered toxin bodies (ETBs), today reported financial results for the second quarter of 2020.

“Since our last quarterly update, we presented preclinical data at AACR on four preclinical ETB programs, provided an update on the ongoing Phase I study for MT-5111, and strengthened our balance sheet through a new debt facility and our ATM,” said Eric Poma, Ph.D., Molecular Templates’ Chief Executive and Chief Scientific Officer. “In the second half of 2020, we expect to report interim clinical data from our three MT-3724 Phase 2 studies and additional data from the MT-5111 Phase 1 study, and also file the IND for MT-6402, our PD-L1-targeted ETB with antigen seeding.”

Company Highlights, Pipeline Status, and Upcoming Milestones

Corporate

• On May 22, 2020, MTEM announced it had secured a debt financing facility for up to $45 million from K2 HealthVentures, a healthcare-focused specialty finance company. MTEM received a first tranche of $15 million upon closing. Two subsequent tranches totaling $30 million will become available upon the achievement of certain milestones.
• In July 2020, MTEM raised $50 million in gross proceeds from its At-The-Market Facility (ATM).

MT-3724 (CD20 ETB)

• MTEM is currently conducting three Phase 2 studies with MT-3724 in relapsed/refractory diffuse large B-cell lymphoma (DLBCL): a monotherapy study that has the potential to be pivotal, a combination study with chemotherapy, and a combination study with lenalidomide.
• Interim results for the study of MT-3724 in combination with lenalidomide were presented at the 25th Congress of the European Hematology Association (EHA) virtual meeting in June 2020.  This data demonstrated preliminary evidence of tolerability and efficacy with lenalidomide at standard doses and MT-3724. Among 7 evaluable subjects, 2 had CRs and 3 had PRs. While there were no permanent discontinuations due to adverse events, grade 2 capillary leak syndrome occurred at 25 mcg/kg, leading to the opening of a new cohort at 20 mcg/kg. The study now has a new schedule of therapy with MT-3724 being dosed twice rather than three times weekly for the first two cycles, and then on a weekly schedule thereafter.
• MTEM expects to report updates on all three MT-3724 DLBCL studies in 2H20.
• MTEM also expects to initiate Phase 2 studies for MT-3724 in follicular lymphoma and mantle cell lymphoma in 2H20.   

TAK-169 (CD38 ETB)

• Takeda and MTEM are conducting an ongoing Phase 1 study evaluating TAK-169 in relapsed/refractory multiple myeloma.

MT-5111 (HER2 ETB)

• MTEM is conducting a Phase 1 study of MT-5111 in HER2-positive cancers.
• In June 2020, MTEM provided an interim update from the first three dose cohorts of the dose escalation portion of the Phase 1 study. That update noted that 10 subjects, with a median of 5 prior lines of therapy and a median of 2 prior HER2-targeting regimens, have been treated with MT-5111 (metastatic cholangiocarcinoma n=5, metastatic breast cancer n=4, metastatic gastro-esophageal junction carcinoma n=1).  Thus far, no dose limiting toxicities (DLTs) have been observed in any cohort and MT-5111 appears to be well tolerated, with no cardiotoxicity observed to date (cardiotoxicity is a known potential toxicity for HER2 targeted therapies).
• Further to the June 2020 interim update, MTEM expects to provide an update on results from the subjects still on treatment as well as higher dose cohorts from the dose escalation portion of the Phase 1 study (including doses that are predicted to be clinically active based on preclinical data) in 4Q20.

Research

• MTEM presented preclinical data on ETB programs targeting PD-L1, CTLA-4, SLAMF-7 and CD45 at the American Association for Cancer Research (AACR) Virtual Annual Meeting II, which took place June 22-24, 2020.
• MTEM expects to file an investigational new drug (IND) application for MT-6402, its ETB targeting PD-L1 (with antigen seeding), in 2H20.
• MTEM expects to file an IND application for its ETB targeting CTLA-4 in 2021.

COVID-19 Impact

• The COVID-19 pandemic has resulted in a significant slowdown in the pace of site initiations and patient enrollment across our MT-3724 Phase 2 programs. Much like other sponsors with studies in patients with hematologic malignancies, we are working with sites to determine when a patient is suitable for each research study and to ensure the continued safety of all research participants.  
• To date, screening and enrollment for the MT-5111 Phase 1 study has been less adversely affected than the MT-3724 studies but it is enrolling at slower pace than was projected pre-COVID-19.
• To date, MTEM has been able to continue to work at its cGMP manufacturing facility and laboratories without interruption from COVID-19. As a result, manufacturing of product supply for clinical trials and research activities to support advancement of our preclinical pipeline (including partnered programs) have not been adversely affected by COVID-19 to date.

Financial Results

The net loss attributable to common shareholders for the second quarter of 2020 was $31.2 million, or $0.68 per basic and diluted share. This compares with a net loss attributable to common shareholders of $9.2 million, or $0.25 per basic and diluted share, for the same period in 2019.

Revenues for the second quarter of 2020 were $6.9 million, compared to $5.4 million for the same period in 2019. Revenues for the second quarter of 2020 were comprised of revenues from collaborative research and development agreements with Takeda and Vertex, as well as grant revenue from CPRIT. Total research and development expenses for the second quarter of 2020 were $30.4 million, compared with $10.2 million for the same period in 2019. Total general and administrative expenses for the second quarter of 2020 were $6.4 million, compared with $4.6 million for the same period in 2019.

As of June 30, 2020, MTEM’s cash and investments totaled $91.0 million. With the addition of $50 million in gross proceeds raised through MTEM’s ATM facility after the end of the quarter, MTEM expects to be able to fund operations into 2H22.

About Molecular Templates

Molecular Templates is a clinical-stage company focused on the discovery and development of targeted biologic therapeutics. Our proprietary drug platform technology, known as engineered toxin bodies, or ETBs, leverages the resident biology of a genetically engineered form of Shiga-like Toxin A subunit to create novel therapies with potent and differentiated mechanisms of action for cancer and other serious diseases.

Forward-Looking Statements

This press release contains forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995 (the “Act”). Molecular Templates disclaims any intent or obligation to update these forward-looking statements, and claims the protection of the Act’s Safe Harbor for forward-looking statements.  All statements, other than statements of historical facts, included in this press release regarding strategy, future operations, future financial position, future revenue, projected expenses, prospects, plans and objectives of management are forward-looking statements. In addition, when or if used in this press release, the words “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict” and similar expressions and their variants, as they relate to Molecular Templates may identify forward-looking statements.  Examples of such statements include, but are not limited to, statements relating to the development of the MT-3724, MT-5111, TAK-169, and MT-6402; the expected timing of submitting various IND applications and conducting studies; the expected participation and presentation at upcoming medical conferences; the anticipated effects of the COVID-19 pandemic on the Company’s ongoing clinical studies, manufacturing and preclinical development; and the Company’s belief that its proprietary biologic drug platform technology, or ETBs, provides for a differentiated mechanism of action that may address some of the limitations associated with currently available cancer therapeutics.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, the uncertainties inherent in the preclinical and clinical development process; whether the Company’s cash resources will be sufficient to fund its continuing operations for the periods and/or trials anticipated; the ability of the Company to protect its intellectual property rights; risks from global pandemics including COVID-19; and legislative, regulatory, political and economic developments, as well as those risks identified under the heading “Risk Factors” in the Company’s filings with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and the Company specifically disclaims any obligation to update any forward-looking statement, whether because of new information, future events or otherwise.

Contact:

Adam Cutler
Chief Financial Officer
adam.cutler@mtem.com
862-204-4006

Molecular Templates, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)

	Three Months Ended June 30,							Six Months Ended June 30,
	2020				2019			2020				2019
Research and development revenue, related party	$	3,063			$	5,211		$	3,396			$	11,624
Research and development revenue, other		2,977				—			4,444				—
Grant revenue		869				236			3,210				831
Total revenue		6,909				5,447			11,050				12,455
Operating expenses:
Research and development		30,414				10,243			51,045				18,697
General and administrative		6,412				4,605			12,059				9,540
Total operating expenses		36,826				14,848			63,104				28,237
Loss from operations		29,917				9,401			52,054				15,782
Interest and other income, net		286				543			758				1,053
Interest and other expense, net		(360	)			(301	)		(708	)			(594	)
Loss on extinguishment of debt		(1,237	)			—			(1,237	)			—
Change in fair value of warrant liabilities		—				6			—				2
Loss before provision for income taxes		31,228				9,153			53,241				15,321
Provision for income taxes		—				—			5				—
Net loss		31,228				9,153			53,246				15,321
Net loss attributable to common shareholders	$	31,228			$	9,153		$	53,246			$	15,321
Net loss per share attributable to common shareholders:
Basic and diluted	$	0.68			$	0.25		$	1.17			$	0.42
Weighted average number of shares used in net loss per share calculations:		45,725,481				36,819,846			45,687,278				36,779,638
Basic and diluted

Molecular Templates, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

	June 30, 2020 (unaudited)				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	27,645			$	85,451
Marketable securities, current		63,361				39,633
Prepaid expenses		3,347				2,318
Grants revenue receivable		5,900				7,100
Accounts receivable, related party		3,167				408
In-process research and development - held for sale		4,500				4,500
Other current assets		160				489
Total current assets		108,080				139,899
Marketable securities, non-current		—				1,510
Operating lease right-of-use assets, non-current		9,266				9,959
Property and equipment, net		20,224				18,158
Other assets		4,840				4,676
Total assets	$	142,410			$	174,202
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,660			$	1,465
Accrued liabilities		14,129				14,544
Deferred revenue, current		13,284				8,511
Deferred revenue, current, related party		5,218				8,780
Other current liabilities, related party		5,325				—
Other current liabilities		1,785				2,501
Total current liabilities		41,401				35,801
Deferred revenue, long-term		9,728				18,944
Deferred revenue, long-term, related party		1,849				441
Long-term debt, net		14,721				2,940
Operating lease liabilities, non-current		10,771				11,682
Other liabilities, related party		6,654				—
Other liabilities		1,427				1,366
Total liabilities		86,551				71,174
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock, $0.001 par value:
Authorized: 2,000,000 shares at June 30, 2020 and December 31, 2019; issued and   outstanding: 250 shares at June 30, 2020 and December 31, 2019		—				—
Common stock, $0.001 par value:
Authorized: 150,000,000 shares; issued and outstanding: 45,778,876 shares at   June 30, 2020 and 45,589,157 shares at December 31, 2019		46				46
Additional paid-in capital		273,012				267,089
Accumulated other comprehensive income		172				18
Accumulated deficit		(217,371	)			(164,125	)
Total stockholders’ equity		55,859				103,028
Total liabilities and stockholders’ equity	$	142,410			$	174,202

FAQ

What were the financial results for Molecular Templates in Q2 2020?

Molecular Templates reported a net loss of $31.2 million, or $0.68 per share, with revenues of $6.9 million.

How did COVID-19 impact Molecular Templates' clinical trials?

COVID-19 has led to a significant slowdown in patient enrollment for MT-3724 Phase 2 studies.

What was the cash position of Molecular Templates as of June 30, 2020?

As of June 30, 2020, Molecular Templates held $91 million in cash and investments.

What are the upcoming milestones for Molecular Templates?

The company expects interim results from MT-3724 and MT-5111 studies in the second half of 2020.

What financing activities has Molecular Templates completed recently?

Molecular Templates raised $50 million in gross proceeds through its ATM facility and secured a $45 million debt financing.