Molecular Templates is fighting for survival. Facing threats that could sink the business, the Bristol Myers Squibb-partnered biotech is halving its 222-person team, stopping clinical development of a HER2 drug candidate and focusing its preclinical work on collaborations.
Texas-based Molecular Templates is developing candidates that combine a toxin, specifically a ribosome inactivating bacterial protein, with an antibody targeting domain to deliver a powerful precision attack on tumors. The idea overlaps with antibody-drug conjugates (ADCs) but the biotech says its candidates have advantages, such as the absence of off-target payload release, over the more established modality.
Yet, at a boom time for ADCs, Molecular Templates is struggling to drum up investor enthusiasm. And with its stock trading at 35 cents and a potential financial crisis on the horizon, the biotech has decided to reduce its costs.
The restructuring will halve the company’s workforce, which features 222 full-time employees. As part of the changes, Molecular Templates is narrowing its focus to its clinical-phase PD-L1, CTLA-4 and CD38 candidates. Clinical development of a HER2 asset is stopping. In preclinical, the biotech will largely work on the collaboration with Bristol Myers, which paid $70 million to partner in 2021.
After making the changes, Molecular Templates estimates that the $61 million it had at the end of last year will keep it going into the second quarter of next year. However, that cash runway forecast assumes the biotech will remain compliant with the terms of a loan. The loan accounts for $35 million of the $61 million and has a maturity date of June 1, 2024.
There are questions over whether the company will stay compliant with the loan terms. Restructuring should keep Molecular Templates compliant into the fourth quarter of 2023. After that, the company may trigger an insolvency event that causes the accelerated repayment of the loan. Molecular Templates warned investors that there is substantial doubt about its ability to continue as a going concern.
The biotech needs to raise additional capital or negotiate an amendment to the loan to avoid becoming noncompliant with the terms. A dreadful 12 months for Molecular Templates’ stock which saw it plummet from $3.45 per share at the start of April 2022 to just 35 cents yesterday, has left the company in a weak position from which to try to raise additional capital.
Molecular Templates released its results shortly after Aptinyx provided an update on its situation. As the biotech disclosed at the start of the month, it laid off 60% of its staff in the wake of another clinical flop. The update reveals an analysis of the first 100 patients in another trial, in post-traumatic stress disorder, prompted Aptinyx to stop development in the indication. The biotech is now searching for strategic alternatives.