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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to             

Commission File Number: 001-32979

 

Molecular Templates, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

94-3409596

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

9301 Amberglen Blvd

Suite 100

Austin, TX 78729

(Address of principal executive offices)

 

 

78729

(Zip Code)

(512) 869-1555

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.001 Par Value Per Share

 

MTEM

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No 

On November 8, 2021 there were 56,305,049 shares of common stock, par value $0.001 per share, of Molecular Templates, Inc. outstanding.

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements, other than statements of historical facts contained herein, regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these identifying words. These forward-looking statements include, but are not limited to, statements about:

 

 

the implementation of our business strategies, including our ability to pursue development pathways and regulatory strategies for MT-5111, MT-0169, MT-6402 and other engineered toxin body (“ETB”) biologic candidates;

 

our utilization of a next-generation ETB scaffold that has been designed to reduce or eliminate the propensity for innate immunity, including capillary leak syndrome (“CLS”);

 

the timing and our ability to advance the development of our drug or biologic candidates;

 

our plans to pursue discussions with regulatory authorities, and the anticipated timing, scope and outcome of related regulatory actions or guidance;

 

our ability to establish and maintain potential new partnering or collaboration arrangements for the development and commercialization of ETB biologic candidates;

 

our ability to obtain the benefits we anticipate from partnering or collaboration agreements that we may enter into;

 

our financial condition, including our ability to obtain the funding necessary to advance the development of our drug or biologic candidates;

 

the anticipated progress of our drug or biologic candidate development programs, including whether our ongoing and potential future clinical trials will achieve clinically relevant results;

 

our ability to generate data and conduct analyses to support the regulatory approval of our drug or biologic candidates;

 

our ability to establish and maintain intellectual property rights for our drug or biologic candidates;

 

whether any drug or biologic candidates that we are able to commercialize are safer or more effective than other marketed products, treatments or therapies;

 

our ability to discover and develop additional drug or biologic candidates suitable for clinical testing;

 

our ability to identify, in-license or otherwise acquire additional drug or biologic candidates and development programs;

 

our anticipated research and development activities and projected expenditures;

 

our ability to complete preclinical and clinical testing successfully for new drug or biologic candidates that we may develop or license;

 

our ability to have manufactured active pharmaceutical ingredient, or API, and drug or biologic product that meet required release and stability specifications;

 

our ability to have manufactured sufficient supplies of drug product for clinical testing and commercialization;

 

our ability to obtain licenses to any necessary third-party intellectual property;

 

our anticipated use of proceeds from any financing activities;

 

our ability to retain and hire necessary employees and appropriately staff our development programs;

 

the extent to which COVID-19 will continue to impact our business operations or financial condition;

 

our projected financial performance; and

 

the sufficiency of our cash resources; and other risks and uncertainties, including those listed under Part I, Item 1A, “Risk Factors”.

 


Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise indicates, references to “Molecular,” the “Company,” “we,” “our,” “us” or similar terms refer to Molecular Templates, Inc., and our wholly owned subsidiaries.

 

 


 

 

Molecular Templates, Inc.

TABLE OF CONTENTS

 

 

  

 

Page

PART I.

  

FINANCIAL INFORMATION

 

4

Item 1.

  

Financial Statements

 

4

 

  

Condensed Consolidated Balance Sheets (Unaudited)

 

4

 

  

Condensed Consolidated Statements of Operations (Unaudited)

 

5

 

 

Condensed Consolidated Statements of Comprehensive Loss (Unaudited)

 

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

 

7

 

  

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

8

 

  

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

9

Item 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

 

34

Item 4.

  

Controls and Procedures

 

34

PART II.

  

OTHER INFORMATION

 

35

Item 1

  

Legal Proceedings

 

35

Item 1A.

  

Risk Factors

 

35

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

 

81

Item 3.

  

Defaults Upon Senior Securities

 

81

Item 4.

  

Mine Safety Disclosures

 

81

Item 5.

  

Other Information

 

81

Item 6.

  

Exhibits

 

82

SIGNATURES

 

83

 

 

 

3


 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

Molecular Templates, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

September 30,

2021(unaudited)

 

 

December 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,593

 

 

$

25,218

 

Marketable securities, current

 

 

141,783

 

 

 

68,667

 

Prepaid expenses

 

 

7,623

 

 

 

6,080

 

Accounts receivable, related party

 

 

 

 

 

234

 

Other current assets

 

 

445

 

 

 

1,125

 

Total current assets

 

 

177,444

 

 

 

101,324

 

Marketable securities, non-current

 

 

6,013

 

 

 

 

Operating lease right-of-use assets

 

 

9,002

 

 

 

11,104

 

Property and equipment, net

 

 

20,451

 

 

 

22,254

 

Other assets

 

 

5,019

 

 

 

5,195

 

Total assets

 

$

217,929

 

 

$

139,877

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,311

 

 

$

2,350

 

Accrued liabilities

 

 

11,305

 

 

 

12,575

 

Deferred revenue, current

 

 

32,240

 

 

 

14,014

 

Deferred revenue, current, related party

 

 

 

 

 

789

 

Other current liabilities, related party

 

 

 

 

 

5,614

 

Other current liabilities

 

 

2,541

 

 

 

2,211

 

Total current liabilities

 

 

47,397

 

 

 

37,553

 

Deferred revenue, long-term

 

 

51,302

 

 

 

4,538

 

Deferred revenue, long-term, related party

 

 

 

 

 

3,106

 

Long-term debt, net of current portion

 

 

35,251

 

 

 

14,926

 

Operating lease liabilities

 

 

10,284

 

 

 

12,213

 

Other liabilities, related party

 

 

 

 

 

6,711

 

Other liabilities

 

 

1,590

 

 

 

1,490

 

Total liabilities

 

 

145,824

 

 

 

80,537

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value:

 

 

 

 

 

 

 

 

Authorized: 2,000,000 shares at September 30, 2021 and

   December 31, 2020; issued and outstanding: 250 shares at

September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value:

 

 

 

 

 

 

 

 

Authorized: 150,000,000 shares at September 30, 2021 and

   December 31, 2020; issued and outstanding: 56,297,967 shares at

September 30, 2021 and 49,984,333 shares at December 31, 2020

 

 

56

 

 

 

50

 

Additional paid-in capital

 

 

413,857

 

 

 

328,314

 

Accumulated other comprehensive income, (loss)

 

 

(1

)

 

 

17

 

Accumulated deficit

 

 

(341,807

)

 

 

(269,041

)

Total stockholders’ equity

 

 

72,105

 

 

 

59,340

 

Total liabilities and stockholders’ equity

 

$

217,929

 

 

$

139,877

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

Molecular Templates, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development revenue, related party

 

$

 

 

$

1,566

 

 

$

13,136

 

 

$

4,962

 

Research and development revenue, other

 

 

2,379

 

 

 

2,732

 

 

 

7,597

 

 

 

7,176

 

Grant revenue

 

 

 

 

 

 

 

 

 

 

 

3,210

 

Total revenue

 

 

2,379

 

 

 

4,298

 

 

 

20,733

 

 

 

15,348

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

22,881

 

 

 

19,622

 

 

 

65,328

 

 

 

70,667

 

General and administrative

 

 

9,027

 

 

 

7,547

 

 

 

26,178

 

 

 

19,606

 

Total operating expenses

 

 

31,908

 

 

 

27,169

 

 

 

91,506

 

 

 

90,273

 

Loss from operations

 

 

29,529

 

 

 

22,871

 

 

 

70,773

 

 

 

74,925

 

Interest and other income, net

 

 

175

 

 

 

167

 

 

 

308

 

 

 

925

 

Interest and other expense, net

 

 

(1,033

)

 

 

(521

)

 

 

(2,301

)

 

 

(1,229

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(1,237

)

Loss before provision for income taxes

 

 

30,387

 

 

 

23,225

 

 

 

72,766

 

 

 

76,466

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

5

 

Net loss

 

 

30,387

 

 

 

23,225

 

 

 

72,766

 

 

 

76,471

 

Net loss attributable to common shareholders

 

$

30,387

 

 

$

23,225

 

 

$

72,766

 

 

$

76,471

 

Net loss per share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.54

 

 

$

0.47

 

 

$

1.32

 

 

$

1.63

 

Weighted average number of shares used in net loss per share

   calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

56,174,644

 

 

 

49,026,499

 

 

 

54,958,365

 

 

 

46,808,437

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

Molecular Templates, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, except share and per share data)

(unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

30,387

 

 

$

23,225

 

 

$

72,766

 

 

$

76,471

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain, (loss) on available-for-sale securities

 

 

(9

)

 

 

(99

)

 

 

(18

)

 

 

55

 

Comprehensive loss

 

$

30,396

 

 

$

23,324

 

 

$

72,784

 

 

$

76,416

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


 

MOLECULAR TEMPLATES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share data)

(unaudited)

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Total Stockholders' Equity (Deficit), beginning balances

 

$

97,402

 

 

$

55,859

 

 

$

59,340

 

 

$

103,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

56

 

 

 

46

 

 

 

50

 

 

 

46

 

Issuance of common stock pursuant to stock plans

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Issuance of common stock pursuant to public offering

 

 

 

 

 

 

 

 

6

 

 

 

 

Ending balance

 

 

56

 

 

 

50

 

 

 

56

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Paid-In Capital

 

 

 

 

 

 

Beginning balance

 

 

408,758

 

 

 

273,012

 

 

 

328,314

 

 

 

267,089

 

Issuance of common stock pursuant to stock plans

 

 

856

 

 

 

249

 

 

 

1,582

 

 

 

930

 

Stock-based compensation

 

 

4,243

 

 

 

3,285

 

 

 

12,822

 

 

 

8,527

 

Issuance of common stock pursuant to public offering

 

 

 

 

 

48,368

 

 

 

71,139

 

 

 

48,368

 

Ending balance

 

 

413,857

 

 

 

324,914

 

 

 

413,857

 

 

 

324,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income, (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

8

 

 

 

172

 

 

 

17

 

 

 

18

 

Other comprehensive income, (loss)

 

 

(9

)

 

 

(99

)

 

 

(18

)

 

 

55

 

Ending balance

 

 

(1

)

 

 

73

 

 

 

(1

)

 

 

73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(311,420

)

 

 

(217,371

)

 

 

(269,041

)

 

 

(164,125

)

Net loss

 

 

(30,387

)

 

 

(23,225

)

 

 

(72,766

)

 

 

(76,471

)

Ending balance

 

 

(341,807

)

 

 

(240,596

)

 

 

(341,807

)

 

 

(240,596

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

$

72,105

 

 

$

84,441

 

 

$

72,105

 

 

$

84,441

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

Molecular Templates, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

72,766

 

 

$

76,471

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation, amortization and other

 

 

4,828

 

 

 

2,526

 

Stock-based compensation expense

 

 

12,822

 

 

 

8,527

 

Interest accrued on long-term debt

 

 

137

 

 

 

106

 

Amortization of debt discount and accretion related to debt

 

 

497

 

 

 

344

 

Accretion of asset retirement obligations

 

 

100

 

 

 

93

 

Loss on extinguishment of debt

 

 

 

 

 

1,237

 

Loss on disposal of property and equipment

 

 

356

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(1,543

)

 

 

(2,571

)

Accounts receivable, related party

 

 

234

 

 

 

107

 

Grants revenue receivable

 

 

 

 

 

3,610

 

Other assets

 

 

818

 

 

 

301

 

Operating lease right-of-use assets and liabilities

 

 

504

 

 

 

(129

)

Accounts payable

 

 

(1,048

)

 

 

644

 

Accrued liabilities

 

 

(1,635

)

 

 

(1,930

)

Other liabilities

 

 

(472

)

 

 

 

Other liabilities, related party

 

 

(11,853

)

 

 

12,209

 

Deferred revenue

 

 

64,990

 

 

 

(7,174

)

Deferred revenue, related party

 

 

(3,895

)

 

 

(3,720

)

Net cash used in operating activities

 

 

(7,926

)

 

 

(62,291

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,113

)

 

 

(4,512

)

Proceeds of sale of equipment

 

 

 

 

 

15

 

Purchase of marketable securities

 

 

(184,490

)

 

 

(115,895

)

Sales of marketable securities

 

 

105,350

 

 

 

72,523

 

Net cash used in investing activities

 

 

(82,253

)

 

 

(47,869

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of capital and finance lease obligations

 

 

(1

)

 

 

(16

)

Proceeds from issuance of long-term debt and warrants, net

 

 

19,828

 

 

 

14,677

 

Repayment of long-term debt

 

 

 

 

 

(5,176

)

Proceeds from stock option exercises

 

 

1,582

 

 

 

930

 

Proceeds from issuance of common stock and warrants, net offering expenses

 

 

71,145

 

 

 

48,372

 

Net cash provided by financing activities

 

 

92,554

 

 

 

58,787

 

Net increase/(decrease) in cash, cash equivalents, and restricted cash

 

 

2,375

 

 

 

(51,373

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

28,886

 

 

 

88,451

 

Cash, cash equivalents and restricted cash, end of period

 

$

31,261

 

 

$

37,078

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,593

 

 

$

33,410

 

Restricted cash included in other assets

 

 

3,668