Molecular Templates Inc (Nasdaq:MTEM) will work with Japan's Takeda Pharmaceutical Company Ltd to develop CD38-targeted engineered toxin bodies (ETBs) for the treatment of patients with diseases such as multiple myeloma, under a new agreement announced on Wednesday.

The lead development candidate is a CD38-targeted ETB that resulted from a previous discovery collaboration between the two companies, Molecular Templates said.

Through this earlier collaboration the parties developed a series of preclinical stage ETBs targeting CD38.

Now, under the new licence, development and commercialisation agreement, they will further develop the ETBs for the treatment of multiple myeloma, a type of bone marrow cancer.

Multiple myeloma cells widely express the CD38 protein, making it an increasingly important target in the development of therapeutics for the disease.

Takeda will make an upfront payment of USD30m and Molecular Templates is eligible to receive development, regulatory and commercial milestone payments of up to USD632.5m if Molecular Templates exercises its co-development option or USD337.5m if Molecular Templates does not exercise or opts out of its co-development option.

In addition, Takeda has agreed to pay royalties on sales of the commercial product developed through the collaboration.

Development costs will be shared equally between Molecular Templates and Takeda.