Mergers and Acquisitions

Date: 2017-03-17

Type of information: Company acquisition

Acquired company: Threshold Pharmaceuticals (USA - CA)

Acquiring company: Molecular Templates (USA - TX)


Terms: * On March 17, 2017, Threshold Pharmaceuticals and Molecular Templates 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 . 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. Eric Poma  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. 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 .

Details: The transaction will build a new Nasdaq-listed company focused on developing novel treatments for cancer. Combined company will be capitalized to support advancement of MT-3724 through pivotal trial in NHL and evofosfamide through Phase 1b trial at MD Anderson Cancer Center. MT-3724, is an Engineered Toxin Body (ETB) that targets the CD20 cell surface antigen present in a variety of lymphomas and leukemias. 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. 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. Threshold is developing evofosfamide (previously known as TH-302), an investigational hypoxia-activated prodrug of a bis-alkylating agent that is preferentially activated under severe hypoxic tumor conditions. 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 .

Related: Cancer - Oncology

Is general: Yes