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Threshold Pharmaceuticals Reports Third Quarter 2012 Financial

Threshold Pharmaceuticals Reports Third Quarter 2012 Financial and
Operational Results 
SOUTH SAN FRANCISCO, CA -- (Marketwire) -- 11/02/12 --  Threshold
Pharmaceuticals, Inc. (NASDAQ: THLD) today reported financial results
for the third quarter ended September 30, 2012. Revenue for the third
quarter ended September 30, 2012 was $1.8 million. The operating loss
for the third quarter ended September 30, 2012 was $4.0 million. The
net loss for the third quarter ended September 30, 2012 was $1.0
million, which included the operating loss of $4.0 million and
non-cash income of $3.0 million related to the changes in fair value
of the Company's outstanding and exercised warrants and was
classified as other income (expense). As of September 30, 2012,
Threshold had $65.8 million in cash, cash equivalents and marketable
securities, with no debt outstanding.  
Threshold recognized revenue of $1.8 million in the third quarter of
2012, related to a $25 million upfront payment and $32.5 million in
milestone payments earned during the first quarter of 2012 as part of
the global license and co-development agreement for TH-302 with Merck
KGaA, Darmstadt, Germany. Subsequent to the third quarter of 2012,
Threshold earned an additional $10 million milestone payment. The
revenue from the upfront payment and milestone payments earned under
the agreement is being amortized over the relevant performance
period, rather than being immediately recognized when the upfront
payment and milestone is earned or received. To date, the Company has
received $45 million in upfront and milestone payments. The remaining
$22.5 million in earned milestone payments will be paid during the
fourth quarter of 2012. Threshold could also receive an additional
$42.5 million in potential milestone payments in the near term. 
The net loss for the third quarter of 2012 was $1.0 million compared
to a net loss of $4.0 million for the third quarter of 2011. Included
in the net loss for the third quarter of 2012 was non-cash income of
$3.0 million compared to non-cash income of $3.7 million in the third
quarter of 2011. The non-cash income is related to the change in fair
value of the Company's outstanding and exercised warrants and was
classified as other income (expense). Operating loss for the third
quarte
r of 2012 was $4.0 million compared to $7.8 million for the
third quarter of 2011. Research and development expenses were $4.0
million for the third quarter of 2012, compared to $6.5 million for
the third quarter of 2011. The $2.5 million decrease in research and
development expenses are primarily related to the $4.8 million
reimbursement credit obtained as part of Merck's 70% share of total
TH-302 development funding under the Merck collaboration, partially
offset by an increase of $2.5 million in clinical development and
employee related expenses.  
General and administrative expenses were $1.7 million for the third
quarter of 2012 versus $1.3 million for the third quarter of 2011.
The $0.4 million increase in general and administrative expenses was
due to an increase in employee related expenses. Non-cash stock-based
compensation expense included in operating expenses was $0.9 million
for the third quarter of 2012 versus $0.3 million for the third
quarter of 2011. The increase in stock-based compensation expense is
due to the amortization of a greater number of options with a higher
fair value.  
For the nine months ended September 30, 2012, cash provided by
operating activities was $24.9 million. During the quarter ended
September 30, 2012, the Company received approximately $1.6 million
from the exercise of warrants to purchase approximately 0.9 million
shares of common stock. As of September 30, 2012, Threshold had $65.8
million in cash, cash equivalents and marketable securities.  
Clinical Development Update 
Threshold is evaluating TH-302, its lead hypoxia-targeted drug, in
patients with various solid tumors and hematologic malignancies.
Threshold has several ongoing clinical trials of TH-302, including
the most advanced "406 trial," a pivotal Phase 3, randomized
controlled trial in combination with doxorubicin in patients with
metastatic or locally advanced unresectable soft tissue sarcoma. The
"404 trial" is a randomized Phase 2 trial investigating two dose
levels of TH-302 in combination with gemcitabine versus gemcitabine
alone in patients with advanced pancreatic adenocarcinoma. The "407
trial" is a Phase 1 monotherapy trial in patients with advanced
leukemias. The "408 trial" is a Phase 1/2 trial exploring TH-302
monotherapy and in combination with bortezomib in patients with
multiple myeloma. The "410 trial" is a Phase 1/2 trial in combination
with sunitinib in patients with renal cell carcinoma,
gastrointestinal stromal tumors or pancreatic neuroendocrine tumors.
To date, across all clinical trials, TH-302 has been administered to
more than 700 patients with cancer.  
Key accomplishments during the quarter were as follows: 


 
--  Updated data including the overall survival results from the "404
    trial" evaluating TH-302 in patients with first-line advanced
    pancreatic cancer were presented at the European Society for Medical
    Oncology (ESMO) 2012 Congress in Vienna, Austria.
--  First data from an ongoing dose-escalation Phase 1/2
    investigator-sponsored clinical trial evaluating the safety and
    efficacy of TH-302 in combination with bevacizumab in patients with
    recurrent glioblastoma were also reported at the ESMO 2012 Congress.
--  The U.S. Food and Drug Administration (FDA) reached agreement with the
    U.S. affiliate of Merck KGaA covering a Special Protocol Assessment
    (SPA) for a Phase 3 randomized trial of TH-302 in patients with
    metastatic or locally advanced unresectable pancreatic cancer.

  
Key Milestones 
Threshold currently anticipates the following key near term clinical
milestones for TH-302: 


 
--  Merck to initiate the planned pivotal Phase 3 randomized study in
    patients with first-line pancreatic cancer.
--  Provide an update in the first half of 2013 on the interim progression
    free survival futility analysis for the "406 trial".

  
About TH-302
 TH-302 is a hypoxia-targeted drug designed to be
activated under tumor hypoxic conditions, a hallmark of many cancers.
Areas of low oxygen levels (hypoxia) are common in many solid tumors
due to insufficient blood vessel growth. Similarly, the bone marrow
of patients with hematological malignancies has also been shown, in
some cases, to be extremely hypoxic. 
TH-302 has been investigated in over 700 patients in Phase 1/2
clinical trials to date in a broad spectrum of tumor types, both as a
monotherapy and in combination with chemotherapy treatments and other
targeted cancer drugs. Threshold has several additional ongoing
clinical trials, the most advanced of which is a Phase 3 pivotal
study evaluating TH-302 in combination with doxorubicin versus
doxorubicin alone in patients with soft tissue sarcoma. In February
2012, Threshold signed a global license and co-development agreement
for TH-302 with Merck KGaA, Darmstadt, Germany. 
About Threshold Pharmaceuticals 
 Threshold is a biotechnology
company focused on the discovery and development of drugs targeting
Tumor Hypoxia, the low oxygen condition found in microenvironments of
most solid tumors as well as the bone marrows of some 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 th
at hold promise to be more effective and less
toxic to healthy tissues than conventional anticancer drugs. For
additional information, please visit our website
(www.thresholdpharm.com). 
Forward-Looking Statements
 Except for statements of historical fact,
the statements in this press release are forward-looking statements,
including statements regarding Threshold's product candidates,
anticipated milestones, clinical trials and anticipated results and
announcements, potential therapeutic uses and benefits of TH-302 and
financial results, estimates, projections and requirements, including
anticipated and potential payments from Merck KGaA. These statements
involve risks and uncertainties that can cause actual results to
differ materially from those in such forward-looking statements.
Potential risks and uncertainties include, but are not limited to,
Threshold's ability to enroll or complete its anticipated clinical
trials, the time and expense required to conduct such clinical trials
and analyze data, whether Merck elects to initiate additional trials,
issues arising in the regulatory or manufacturing process and the
results of such clinical trials (including product safety issues and
efficacy results). Further information regarding these and other
risks is included under the heading "Risk Factors" in Threshold's
Quarterly Report on Form 10-Q, which has been filed with the
Securities Exchange Commission on August 6, 2012 and is available
from the SEC's website (www.sec.gov) and on our website
(www.thresholdpharm.com) under the heading "Investors." We undertake
no duty to update any forward-looking statement made in this news
release.  


 
                                                                            
                                                                            
                      THRESHOLD PHARMACEUTICALS, INC.                       
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                  (in thousands, except per share amounts)                  
                                (Unaudited)                                 
                                                                            
                                                                            
                                     Three Months Ended   Nine Months Ended 
                                        September 30,       September 30,   
                                     ------------------  ------------------ 
                                       2012      2011      2012      2011   
                                     --------  --------  --------  -------- 
                                                                            
                                                                            
Revenue                              $  1,797  $      -  $  3,846  $      - 
                                                                            
Operating expenses                                                          
  Research and development              4,039     6,481    12,623    17,646 
  General and administrative            1,741     1,308     5,229     4,290 
                                     --------  --------  --------  -------- 
    Total Operating Expenses            5,780     7,789    17,852    21,936 
                                     --------  --------  --------  -------- 
                                                                            
    Loss from operations               (3,983)   (7,789)  (14,006)  (21,936)
                                                                            
  Interest income (expense), net           25         6        55        21 
  Other income (expense) (1)            2,967     3,658   (85,572)    1,537 
                                     --------  --------  --------  -------- 
    Net loss                         $   (991) $ (4,125) $(99,523) $(20,378)
                                     ========  ========  ========  ======== 
                                                                            
                                                                            
Net loss per common share                                                   
  Basic                              $  (0.02) $  (0.08) $  (1.86) $  (0.45)
                                     ========  ========  ========  ======== 
  Diluted                            $  (0.06) $  (0.08) $  (1.86) $  (0.45)
                                     ========  ========  ========  ======== 
                                                                            
Weighted-average shares used in per                                         
 common share calculation:                                                  
  Basic                                55,654    49,052    53,516    44,812 
                                     ========  ========  ========  ======== 
  Diluted                              64,405    49,052    53,516    44,812 
                                     ========  ========  ========  ======== 
                                                                            
(1) Noncash income (expense) related to change in the fair value of the     
 Company's outstanding and exercised warrants, classified as other income   
 (expense).                                                                 
                                                                            
                                                                            
                                                                            
                       THRESHOLD PHARMACEUTICALS, INC.                      
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (in thousands)                               
                                                                            
                                                                            
                                                  September 30, December 31,
                                                      2012          2011    
                                                  ------------  ------------
                                                   (unaudited)       (1)    
Assets                                                                      
                                                                            
 Cash, cash equivalents and marketable securities $     65,825  $     20,290
 Collaboration Receivable                               17,457             -
 Prepaid expenses and other current assets               1,149           254
 Property and equipment, net                               728           543
 Other assets                                            1,059         1,349
                                                  ------------  ------------
  Total assets                                    $     86,218  $     22,436
                                                  ============  ============
                                                                            
Liabilities and stockholders' equity                                        
                                                                            
 Total current liabilities (2)                  
  $     16,189  $      8,591
 Deferred Revenue                                       46,467             -
 Long-term liabilities (3)                              67,646         9,362
 Stockholders' equity (net capital deficiency)         (44,084)        4,483
                                                  ------------  ------------
 Total liabilities and stockholders' equity       $     86,218  $     22,436
                                                  ============  ============
                                                                            
                                                                            
(1) Derived from audited financial statements                               
(2) Amount includes current portion of deferred revenue of $7.2M as of      
 September 30, 2012                                                         
(3) Includes as of September 30, 2012 and December 31, 2011, $67.4 million  
 and $9.2 million of warrant liability, respectively.                       

  
Contact
Laura Hansen, Ph.D.
Senior Director, Corporate Communications
Phone: 650-474-8206
E-mail: lhansen@thresholdpharm.com 
 
 
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