Ladenburg starts Molecular Templates at buy

Ladenburg Thalmann initiated coverage of Molecular Templates (NASDAQ:MTEM) with a “buy” rating and $10.00 price target. The stock closed at $5.50 on August 2.

“We believe the company’s Engineered Toxin Bodies (ETBs) platform offers a differentiated mechanism of action (MOA) based on forced internalization of antibody fragments directly to ribosomes through shiga-like toxin A MOA, resulting in disruption of protein synthesis and direct cell-kill,” writes analyst Kevin DeGeeter.

Molecular’s lead product, MT-3724, targeting CD20+ B-cells, is in Phase 1 development for diffuse large B-cell lymphoma (DLBCL), with interim data expected in the first half of 2018.

“If the company can demonstrate 20% overall response rate, in our view, the company should be positioned to begin registration studies in relapse/refractory DLBCL,” he added. 

MT-4019, a CD38 targeted molecule incorporating Molecular’s next-generation scaffold, with improved de-immunization, is slated to begin clinical development for multiple myeloma in the second half of 2018.

In addition, Mr. DeGeeter said the novel MOA of ETBs should be attractive to pharmaceutical companies and he expects partnerships to be an important contributor to both near-term news flow and long-term value creation for Molecular Templates.