Molecular Templates, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Merger with Private Molecular (Tables)

Merger with Private Molecular (Tables)

12 Months Ended

Dec. 31, 2018

Purchase Price for Threshold on Closing Date of Merger

The purchase price for Threshold on August 1, 2017, the closing date of the Merger, was as follows (in thousands, except per share amounts):

	August 1, 2017
Number of share of the combined company owned by Threshold stockholders		6,508		(1)
Multiplied by the price per share of Threshold common stock	$	5.94		(2)
Purchase price before options	$	38,658
Threshold options assumed		1,006		(3)
Settlement of preexisting bridge note with Threshold		(4,010	)	(4)
Total purchase price	$	35,654

Represents the number of shares of common stock of the combined company that Threshold stockholders owned as of the closing of the Merger pursuant to the Merger Agreement. This amount is calculated as 6,508,356 shares from Threshold common stock outstanding as of August 1, 2017, adjusted for the 11-for-1 reverse stock split.

2.	The fair value of Threshold common stock used in determining the purchase price was $5.94, which was derived from the $0.54 per share closing price of Threshold on August 1, 2017, the current price at the time of closing, adjusted for the 11-for-1 reverse stock split.

Because Private Molecular is considered to be the acquirer for accounting purposes, the pre-Merger vested stock options granted by Threshold under the 2014 Equity Incentive Plan are deemed to have been exchanged for equity awards of the Company and as such the portion of the acquisition date fair value of these equity awards attributable to pre-Merger service to Threshold were accounted for as a component of the consideration transferred.

4.	Represent the bridge loan at the date of merger between Threshold and Molecular. Since the receivable on Threshold’s balance sheet was settled as part of the merger, it is deemed to be a reduction in the purchase price.

Summary of Allocation of Purchase Consideration to Assets Acquired and Liabilities Assumed

The following table summarizes the allocation of the purchase consideration to the assets acquired and liabilities assumed based on their fair values as of August 1, 2017 (in thousands):

	August 1, 2017
Cash and cash equivalents	$	11,216
Prepaid expenses and other current assets		945
In-process research and development (IPR&D)		26,623
Accounts payable, accrued expenses		(2,009	)
Warrant liability		(1,121	)
Net assets acquired	$	35,654

Pro Forma Results in Connection with Merger

The unaudited financial information in the following table summarizes the combined results of operations of the Company and Threshold, on a pro forma basis, as if the Merger occurred at the beginning of the periods presented (in thousands, except per share data).

	Unaudited
	Year ended December 31,
	2017
Revenue	$	6,395
Net loss	$	(15,599	)