Item 1.02
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Termination of a Material Definitive Agreement
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On April 1, 2021, Molecular Templates, Inc. (the “Company”) received notice from Millennium Pharmaceuticals, Inc., a wholly owned subsidiary of Takeda Pharmaceutical Company Limited (“Takeda”), that Takeda has decided to terminate the Development Collaboration and Exclusive License Agreement by and between the Company and Takeda, dated September 18, 2018, as amended (the “Collaboration Agreement”) to co-develop one or more products incorporating or comprised of one or more SLT-A fusion proteins targeting CD38 for the treatment of patients with diseases such as multiple myeloma. The termination of the Collaboration Agreement will be effective 90 days following the notice of termination. Following receipt of the termination notice from Takeda, the Company notified Takeda of its intent to assume full rights to TAK-169, a second-generation ETB targeting CD38, by entering into an agreement for such rights pursuant to the termination provisions of the Collaboration Agreement.
Takeda has communicated that its decision to turn over full rights of TAK-169 was the result of Takeda’s ongoing portfolio prioritization. The Company believes that TAK-169 is a potent molecule with a novel mechanism of action in multiple myeloma. It has demonstrated a favorable safety and efficacy profile in in vivo models and potency against daratumumab refractory patient samples. TAK-169 is in an ongoing Phase 1 study with dose escalation planned through six dose cohorts, in which the first patient was dosed in February 2020. To date, Takeda has enrolled and treated four subjects in the Phase 1 study. There have been no life-threatening toxicities, and no signs of capillary leak syndrome (CLS). The maximum tolerated dose (MTD) has not been reached, patient screening continues, and dose escalation is ongoing. One dose limiting toxicity (grade 2 myocarditis) was assessed in one subject. A mild elevation in Troponin I was noted in this subject after the third dose of TAK-169. No EKG or echocardiographic abnormalities and no clinical symptoms were noted. A stable elevation in high-sensitivity troponin was seen although no comparison to baseline was available as baseline levels were not required per protocol at the time. An independent radiologist and cardiologist reviewed the imaging in the case and concluded that there was weak to intermediate evidence of myocarditis. The subject had multiple pre-existing cardiac risk factors. No other cardiac adverse events were observed in any other subject. Pharmacokinetic and pharmacodynamic data of this first cohort have been in-line with predicted outcomes. The Company looks forward to accelerating the full enrollment and completion of this safety and dose-finding study. The Company’s manufacturing of TAK-169 has been qualified by Takeda and the Company has sufficient TAK-169 drug supply to continue the Phase 1 study as planned. The Company’s assumption of the full rights to TAK-169 is expected to result in cost savings in 2021 and the Company’s guidance of cash runway into the second half of 2023 is unchanged. Upon transfer of the full TAK-169 rights to the Company, per the terms of the Collaboration Agreement, the Company will owe Takeda low-single digit royalties on future net sales of TAK-169. The Company anticipates that the transition of TAK-169 development from Takeda to the Company will be conducted over the next 90 days.
Pursuant to the terms of the Collaboration Agreement, the total transaction price of the Collaboration Agreement was $29.8 million, consisting of (1) the $30.0 million upfront payment to the Company, (2) a $10.0 million development milestone payment, which was achieved by the Company in the first quarter of 2020, (3) minus $10.2 million in expected co-share payments payable to Takeda. In July 2019, the Company exercised its co-development option and the agreed upon collaboration budget was increased to cover additional research and development activities.
In addition to the Collaboration Agreement, the Company has a separate multi-target collaboration and license agreement with Takeda, dated June 23, 2017, which remains in effect.
The foregoing summary of the terms of the Collaboration Agreement, as amended, is qualified in its entirety by reference to the full text of the Collaboration Agreement, which was filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2018 and the First Amendment to the Collaboration Agreement, which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on November 12, 2019, and which are both incorporated by reference herein.
A copy of the press release announcing the termination of the Collaboration Agreement is filed as Exhibit 99.1 and is incorporated by reference herein.