Threshold Pharma and Molecular Templates agree to merge

US clinical-stage cancer drug developer Threshold Pharmaceuticals (Nasdaq: THLD) and Molecular Templates, a privately-held biopharmaceutical company, today jointly announced that they have entered into a definitive all-stock merger agreement. The news sent Threshold’s share leaping 18% to $0.72.

The transaction will result in a combined company focused on the development of novel treatments for cancer. Longitude Capital, a USA-based venture capital firm, will invest $20 million at the close of the transaction, subject to certain conditions, including the receipt of additional equity financing commitments of $20 million. The stock of the combined company will be traded on the Nasdaq Capital Market under the symbol MTEM, with Threshold changing its name to Molecular Templates.

On a pro forma basis and based upon the number of shares of common stock to be issued in the merger, current Threshold shareholders would own around 34.4% of the combined company and current Molecular Templates shareholders would own approximately 65.6% of the combined company although the actual allocation will be subject to adjustment based on Threshold’s net cash balance.