Threshold Reports Second Quarter Financial Results

Published: Aug 01, 2017

-- Initiated Phase 1 immunotherapy clinical trial of evofosfamide and ipilumumab at MD Anderson Cancer Center --

MENLO PARK, Calif., July 31, 2017 (GLOBE NEWSWIRE) -- Threshold Pharmaceuticals, Inc. (Nasdaq:THLD) today reported financial results for the second quarter ended June 30, 2017 and provided an update on the Company's corporate and clinical development activities.

Evofosfamide Update
Threshold’s lead product candidate is an investigational hypoxia-activated prodrug that is designed to be activated under tumor hypoxic conditions, a hallmark of many cancers. Recent updates include:

  • Initiated a Phase 1 clinical trial evaluating evofosfamide in combination with the immune checkpoint antibody, ipilumumab, at the University of Texas MD Anderson Cancer Center to potentially improve the efficacy of immune checkpoint antibody as an anti-cancer therapy.

TH-3424 Update
On May 31, 2017, Threshold, and OBI Pharma Inc. (“OBI”), entered into an Asset Transfer Agreement pursuant to which the Company agreed to sell to OBI certain rights to TH-3424. The assets purchased by OBI pursuant to the Asset Transfer Agreement included certain specified intellectual property, as well as assumed contracts and documentation, in each case, related to TH-3424. In connection with the sale of TH-3424, OBI also assumed certain liabilities and obligations of the Company arising out of or related to certain of the assumed contracts. In addition, the Company granted to OBI a non-exclusive, nontransferable, fully paid-up license of certain of its intellectual property rights for use by OBI in the development of TH-3424. OBI paid the Company $3.0 million and the transaction closed on June 16, 2017.

Update Regarding Merger with Molecular Templates Inc.
Threshold announced on March 17, 2017 that it had entered into a definitive agreement under which Molecular Templates will merge with a wholly owned subsidiary of Threshold in an all-stock transaction. In addition, subject to the closing of the merger, the combined company expects to close on approximately $40 million of equity financing pursuant to equity commitment letters previously reported, including from Longitude Capital, a U.S. based venture capital firm, which will invest $20 million at the close of the transaction, subject to certain conditions. Shortly following the closing of this equity financing, the combined company also expects to close on an additional $20 million of equity financing from an investment from Millenium Pharmaceuticals, Inc., a wholly owned subsidiary of Takeda Pharmaceuticals:

  • Each of these transactions was approved by the board of directors of both companies. Threshold’s annual meeting of stockholders, at which the stockholder approvals necessary to close the merger and the equity financings, is scheduled for 9:00 a.m. PT today, July 31, 2017. If approvals are obtained, and subject to other customary closing conditions, the Company expects all of these transactions to close this week.
  • In connection with, and as a condition of closing the Merger, and subject to the approval of the stockholders of the Company at the meeting to be held today, the Company’s Board of Directors intends to effect a reverse stock split within a range of every 5 to 15 shares (or any number in between) of outstanding Threshold common stock being combined and reclassified into one share of common stock.
  • Assuming receipt of the necessary stockholder approvals, the specific ratio of the reverse stock split and the results of the annual meeting will be announced by a separate press release this week.

Second Quarter 2017 Financial Results

  • Cash, cash equivalents and marketable securities totaled $16.8 million at June 30, 2017 compared to $17.6 million at March 31, 2017. The net decrease of $0.9 million was a result of $1.8 million for operating cash requirements for the quarter ended June 30, 2017, and a $2.0 million bridge loan to Molecular Templates in the form of a promissory note, partially offset by a $3.0 million payment received from OBI for sale of TH-3424.
  • Revenue for the second quarter ended June 30, 2017, was $3.0 million, compared to no revenue for the same period in 2016. Revenue for the second quarter ended June 30, 2017 related to the receipt of non-refundable payments in aggregate of $3.0 million from OBI for the sale of TH-3424. The Company immediately recognized the $3.0 million as revenue since there were no further obligations under the Asset Transfer Agreement upon the completion of the transfer of Threshold’s rights and obligations to OBI, which occurred on June 16, 2017.

  • Research and development expenses were $1.1 million for the second quarter ended June 30, 2017, compared to $4.0 million for the same period in 2016. The $2.9 million decrease in research and development expenses, net of reimbursement for Merck KGaA, Darmstadt, Germany’s 70 percent share of total eligible collaboration expenses for evofosfamide, was due primarily to a $2.1 million decrease in clinical development and consulting expenses, and a $0.8 million decrease in employee related expenses, including a $0.2 million decrease in non-cash stock-based compensation expense.

  • General and administrative expenses were $1.7 million for the second quarter ended June 30, 2017 compared to $1.9 million for the same period in 2016. The $0.2 million decrease in general and administrative expenses was due to a $0.5 million decrease in employee related expenses (including a $0.2 million decrease in noncash stock-based compensation expense), partially offset by a $0.3 million increase in consulting expenses for merger-related activities.
  • Non-cash stock-based compensation expense included in total operating expenses was $0.4 million for the second quarter ended June 30, 2017 compared to $0.8 million for the same period in 2016. The decrease in stock-based compensation expense was due to the amortization of a smaller number of options with lower fair values.

  • Net income for the second quarter ended June 30, 2017 was $1.1 million compared to a net loss of $6.9 million for the same period in 2016. Included in the net income for the second quarter of 2017 was operating income of $0.2 million and non-cash income of $0.9 million compared to operating loss of $5.9 million and non-cash expense of $1.0 million for the second quarter of 2016.

About Evofosfamide
Evofosfamide (previously known as TH-302) is an investigational hypoxia-activated prodrug of a bis-alkylating agent that is preferentially activated under severe hypoxic tumor conditions, a feature of many solid tumors. Areas of low oxygen levels (hypoxia) in solid tumors are due to insufficient blood vessel supply. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be severely hypoxic.

About Threshold Pharmaceuticals

Threshold is a clinical-stage biopharmaceutical company focused on the development of drugs and diagnostic agents targeting the tumor microenvironment of solid tumors and hematologic malignancies. This approach offers broad potential to treat a variety of cancers. By selectively targeting tumor cells, we are building a pipeline of drugs that hold promise to be more effective and less toxic to healthy tissues than conventional anticancer drugs. For additional information, please visit the Company’s website.

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No public offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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