Molecular Templates Announces Debt Payoff and Restructuring

• Restructuring agreement with K2 HealthVentures (K2HV) to fully discharge and satisfy outstanding debt owed to K2HV for the prepayment of $27.5 million and the granting of contingent value rights and warrants
  
  
• Additional reduction-in-force by approximately 44% as it continues to explore strategic alternatives
  

AUSTIN, Texas, June 16, 2023 (GLOBE NEWSWIRE) -- Molecular Templates, Inc. (Nasdaq: MTEM, “Molecular Templates,” or “MTEM”), a clinical-stage biopharmaceutical company focused on the discovery and development of proprietary targeted biologic therapeutics, engineered toxin bodies (“ETBs”), to create novel therapies with potent differentiated mechanisms of action for cancer, announced today that it has entered into a restructuring agreement (“Amending Agreement”) with K2 HealthVentures (“K2HV”) to satisfy and discharge MTEM’s outstanding secured debt obligations and terminate all other obligations under the existing debt financing facility between Molecular Templates and K2HV. Molecular Templates also announced a restructuring plan that includes reducing its current workforce as it continues to explore strategic alternatives.

The Amending Agreement provides for the following:

• MTEM has paid down $27.5M of its ~$37.8M senior secured debt obligation with K2HV
• The remaining balance of ~$10M will be converted into a security instrument that will be paid back upon the occurrence of certain specified events, such as a successful asset sale or BD transactions, based on specified multipliers and other terms, or, in the alternative, MTEM may elect to pay off the balance in part or in full. Alternatively, K2HV has the right to convert $3M of such contingent value rights into up to 6,124,011 shares of common stock
• K2HV has a warrant to purchase 5,103,343 shares of common stock at an exercise price of ~$0.39
• In the event of a Change in Control transaction, as such term is defined in the Amending Agreement, K2HV will receive an additional $2.5M

Previously, Molecular Templates announced that it has retained Stifel, Nicolaus & Company to assist Molecular Templates¹ in initiating a comprehensive evaluation of strategic alternatives, including, but not limited to, potential financing/recapitalization opportunities, the sale of all, or part, of the company, or a merger, or other strategic transactions. A timetable for completion of this strategic review process has not been set, and there can be no assurance that this strategic review will result in any completed transaction. In connection with the evaluation of strategic alternatives and in order to extend its resources to better position the organization, Molecular Templates today implemented a restructuring plan that includes reducing its current workforce by approximately 44%.