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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 June 30, 2020

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 Capital 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 August 4, 2020, there were 49,919,267 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-3724 and other engineered toxin body (“ETB”) biologic candidates;

 

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 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

 

23

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

 

35

Item 4.

  

Controls and Procedures

 

35

PART II.

  

OTHER INFORMATION

 

36

Item 1

  

Legal Proceedings

 

36

Item 1A.

  

Risk Factors

 

36

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

 

79

Item 3.

  

Defaults Upon Senior Securities

 

79

Item 4.

  

Mine Safety Disclosures

 

79

Item 5.

  

Other Information

 

79

Item 6.

  

Exhibits

 

80

SIGNATURES

 

81

 

 

 

3


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

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 at June 30, 2020 and December 31, 2019; 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

 

 

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

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:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

45,725,481

 

 

 

36,819,846

 

 

 

45,687,278

 

 

 

36,779,638

 

 

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

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

31,228

 

 

$

9,153

 

 

$

53,246

 

 

$

15,321

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

 

(110

)

 

 

25

 

 

 

154

 

 

 

25

 

Comprehensive loss

 

$

31,338

 

 

$

9,128

 

 

$

53,092

 

 

$

15,296

 

 

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

June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Total Stockholders' Equity (Deficit), beginning balances

 

$

83,766

 

 

$

96,137

 

 

$

103,028

 

 

$

100,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

46

 

 

 

37

 

 

 

46

 

 

 

37

 

 

Issuance of common stock pursuant to stock plans

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

 

46

 

 

 

37

 

 

 

46

 

 

 

37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Paid-In Capital

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

269,581

 

 

 

196,972

 

 

 

267,089

 

 

 

195,573

 

 

Issuance of common stock pursuant to stock plans

 

 

381

 

 

 

809

 

 

 

681

 

 

 

847

 

 

Stock-based compensation

 

 

3,050

 

 

 

1,442

 

 

 

5,242

 

 

 

2,803

 

 

Ending balance

 

 

273,012

 

 

 

199,223

 

 

 

273,012

 

 

 

199,223

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

282

 

 

 

 

 

 

18

 

 

 

 

 

Other comprehensive income

 

 

(110

)

 

 

25

 

 

 

154

 

 

 

25

 

 

Ending balance

 

 

172

 

 

 

25

 

 

 

172

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(186,143

)

 

 

(100,872

)

 

 

(164,125

)

 

 

(94,704

)

 

Net loss

 

 

(31,228

)

 

 

(9,153

)

 

 

(53,246

)

 

 

(15,321

)

 

Ending balance

 

 

(217,371

)

 

 

(110,025

)

 

 

(217,371

)

 

 

(110,025

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

$

55,859

 

 

$

89,260

 

 

$

55,859

 

 

$

89,260

 

 

 

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)

 

 

 

Six Months Ended

June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

53,246

 

 

$

15,321

 

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

 

 

 

 

 

 

 

 

Depreciation, amortization and other

 

 

1,318

 

 

 

301

 

Stock-based compensation expense

 

 

5,242

 

 

 

2,803

 

Amortization of debt discount and accretion related to debt

 

 

243

 

 

 

221

 

Change in common stock warrant fair value

 

 

 

 

 

(2

)

Accretion of asset retirement obligations

 

 

62

 

 

 

25

 

Loss on extinguishment of debt

 

 

1,237

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(1,029

)

 

 

(14

)

Accounts receivable, related party

 

 

(2,759

)

 

 

240

 

Grants revenue receivable

 

 

1,200

 

 

 

 

Other assets

 

 

364

 

 

 

(763

)

Operating lease right-of-use assets and liabilities

 

 

(122

)

 

 

678

 

Accounts payable

 

 

149

 

 

 

862

 

Accrued liabilities

 

 

(514

)

 

 

1,098

 

Other liabilities

 

 

 

 

 

(330

)

Other liabilities, related party

 

 

11,979

 

 

 

 

Deferred revenue

 

 

(4,443

)

 

 

 

Deferred revenue, related party

 

 

(2,154

)

 

 

(12,676

)

Net cash used in operating activities

 

 

(42,473

)

 

 

(22,878

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,429

)

 

 

(1,121

)

Purchase of marketable securities

 

 

(60,171

)

 

 

(55,659

)

Sales of marketable securities

 

 

38,323

 

 

 

10,893

 

Net cash used in investing activities

 

 

(25,277

)

 

 

(45,887

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments of capital and finance lease obligations

 

 

(13

)

 

 

(8

)

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

 

 

14,677

 

 

 

 

Repayment of long-term debt

 

 

(5,176

)

 

 

 

Proceeds from stock option exercises

 

 

681

 

 

 

847

 

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

 

 

 

 

 

 

Net cash provided by financing activities

 

 

10,169

 

 

 

839

 

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

 

 

(57,581

)

 

 

(67,926

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

88,451

 

 

 

87,721

 

Cash, cash equivalents and restricted cash, end of period

 

$

30,870

 

 

$

19,795

 

Reconciliation of cash, cash equivalents and restricted cash