It’s been an eventful year so far for Molecular Templates—and not in a good way. The Bristol Myers Squibb-partnered biotech halved its head count in March to reduce costs, before its CD38-directed cancer candidate was hit by a two-month-long FDA hold that only lifted at the start of June.
Now, the company has announced another wave of layoffs, with 44% of the remaining staff set to go as part of a new restructuring plan. The biotech announced the move alongside an agreement with K2 HealthVentures to “satisfy and discharge” the biotech’s debt with the investment firm.
It means that Molecular Templates paid off $27.5 million of its debt to K2, leaving an outstanding balance of around $10 million that will be paid off in the event of certain business developments, such as selling off one of the biotech’s asset or another transaction.
The drug developer still has the option to pay off the balance in full, while K2 can choose to convert $3 million of the outstanding balance into shares of Molecular Templates’ stock.
The biotech had previously announced that it had charged Stifel, Nicolaus & Company to help seek out strategic alternatives to sustain the business, including financing or recapitalization, a sale or merger. The review is still ongoing, and the latest round of layoffs have been conducted to “extend its resources to better position the organization,” the company explained in a postmarket release Friday.
The company had 222 employees before it halved its head count in March, meaning the latest restructuring could potentially impact close to 50 roles.
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, but the biotech says its candidates have advantages such as the absence of off-target payload release over the more established modality.
In the clinic, the company has the CD38-directed MT-0169, for which a phase 1 trial in a type of blood cancer called extramedullary myeloma was restarted in June after the FDA pushed pause on the study in relation to two cardiac adverse events in patients who had received the therapy.
There’s also MT-6402, which is in a phase 1 dose-escalation study for patients with PD-L1-expressing solid tumors. An early-stage study of the CTLA-4-targeting MT-8421 is expected to begin in mid-2023.
Despite scrapping most of its preclinical work alongside its March layoffs, the biotech still has a multifaceted collaboration with Bristol Myers, which paid $70 million to partner in 2021.
In Friday’s release, Molecular Templates said it “intends to continue to support its collaboration with BMS and its clinical studies.”