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Molecular Templates Surges 50%, Inks Cancer Deal With Takeda

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Molecular Templates Surges 50%, Inks Cancer Deal With Takeda

Molecular Templates (MTEM) signs a collaborative contract with Japan's Takeda for jointly developing CD38-targeted engineered toxin antibodies to treat multiple myeloma. The stock soars past 50%.

Molecular Templates, Inc. MTEM announced that it has signed an agreement with Japan’s Takeda Pharmaceutical for jointly developing CD38-targeted engineered toxin antibodies (ETBs) for the treatment of multiple myeloma.

The lead drug candidate for development under the latest deal with Takeda has been selected from a prior discovery collaboration made between the two companies. Both Takeda and Molecular Templates evaluated CD38 ETBs in pre-clinical studies since collaboration deals were inked between the two in October 2016. The companies will soon file an application to begin clinical studies on the candidate.

Shares of Molecular Templates soared 52.4% following the news on Wednesday. However, the stock has declined 37.6% year to date versus the industry’s increase of 2.4%.

Per the terms of the latest agreement, Molecular Templates will receive an upfront payment of $30 million from Takeda and will also be eligible to receive up to $632.5 million as milestones if it exercises its co-development option. Or else, it will get $337.5 million if it does not exercise the same. The company will also gain royalties on net sales of the product, if approved. However, both companies will equally share the developmental costs through this alliance.

In August 2018, Molecular Templates along with its second-quarter earnings release, announced that along with Takeda, it might select a drug candidate for clinical development under the joint CD38 ETB endeavor by the end of the third quarter of 2018. Back then, the company also stated that if both are unable to select a candidate for further development, then it will file an investigational new drug (IND) application for its MT-4019 during the third quarter while initiating a phase I clinical study in the second half of the year.

However, along with the latest release, Molecular Templates did not mention the timeline for submitting the IND petition for MT-4019.

In a separate press release, the company stated its plans to offer/sell $30 million of its common stock in an underwritten public offering. Following the offering, the company plans to fund its ongoing clinical studies as well as further preclinical developments.

Molecular Templates Inc. Price and Consensus

Molecular Templates Inc. Price and Consensus | Molecular Templates Inc. Quote

Zacks Rank & Stocks to Consider

Molecular Templates currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Pacira Pharmaceuticals, Inc. PCRX, BioSpecifics Technologies Corp. BSTC and Gilead Sciences, Inc. GILD, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pacira’s earnings estimates have moved 86.2% north for 2018 and 9.9% for 2019 over the past 60 days. The stock has rallied 12.4% year to date.

BioSpecifics’ earnings estimates have been revised 9.1% upward for 2018 and 11.7% for 2019 over the past 60 days. The stock has surged 34.2% so far this year.

Gilead’s earnings estimates have been raised 7% for 2018 and 2.4% for 2019 over the past 60 days. The stock has increased 3.1% so far this year.

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