Development Deal With Takeda Pharma Sends Molecular Templates Shares Rocketing Higher

Molecular Templates Inc MTEM shares were advancing strongly Wednesday on significantly above-average volume, climbing to a four-month high.

The stock was up nearly 62 percent at $6.64 at the time of publication. 

What Happened

Molecular Templates, a company developing immunotoxins called engineered toxin bodies, or ETBs, to treat cancers and other serious diseases, announced an agreement Wednesday with Japan's Takeda Pharmaceutical Co Ltd TKPYY for jointly developing CD38-targeted ETNs for treating patients with diseases such as multiple myeloma.

The lead development candidate is a CD38-targeted ETB that was identified from a previous collaboration between the companies.

Under the new licensing agreement, the companies will further develop the ETBs for the treatment of multiple myeloma.

Why It's Important

Since multiple myeloma cells widely express the CD38 protein, CD38-targeted ETBs are vital in targeting the disease. CD38-targeted ETBs recognize the protein and deliver a modified bacterial toxin that enters the myeloma cells and destroys them through enzymatic and irreversible destruction of ribosomes.

"Unlike other CD38-targeted therapies, ETBs are not reliant on the body's own immune system for effectiveness, offering the potential of broader and deeper responses," the companies said.

What's Next

The agreement provides for an upfront payment of $30 million from Takeda to Molecular Templates. The latter is eligible to receive development, regulatory and commercial milestone payments of up to $632.5 million if it exercises its co-development option.

If Molecular Templates does not exercise or opts out of its co-development option, it would receive $337.5 million.

Both companies are sharing the development costs equally, and Takeda has agreed to pay Molecular Templates royalties on sales of the commercial product developed through the collaboration.

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