Threshold Pharmaceuticals Reports First Quarter 2013 Financial and Operational Results

Threshold Pharmaceuticals Reports First Quarter 2013 Financial and Operational 
Results 
SOUTH SAN FRANCISCO, CA -- (Marketwired) -- 05/02/13 --  Threshold
Pharmaceuticals, Inc. (NASDAQ: THLD), today reported financial
results for the first quarter 2013. Revenue for the first quarter
ended March 31, 2013 was $2.9 million. The operating loss for the
first quarter ended March 31, 2013 was $6.1 million. The net loss for
the first quarter ended March 31, 2013 was $9.2 million, which
included the operating loss of $6.1 million and non-cash expense of
$3.1 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 March 31, 2013, Threshold had $104.2 million in
cash, cash equivalents and marketable securities, with no debt
outstanding. 
"This was a productive first quarter for Threshold including
initiation of a pivotal Phase 3 clinical trial with TH-302 by our
partner Merck KGaA as well as expansion of our development pipeline
by our acquisition of an investigational hypoxia PET imaging agent,
[18F]-HX4, from Siemens Healthcare," said Barry Selick, Ph.D., Chief
Executive Officer of Threshold. "We remain focused on clinical
execution of ongoing studies of TH-302 and identifying additional
development opportunities and regulatory pathways that could lead to
approval of TH-302 in new indications." 
First Quarter 2013 Financial and Operational Results 
The net loss for the first quarter of 2013 was $9.2 million compared
to a net loss of $115.5 million for the first quarter of 2012.
Included in the net loss for the first quarter of 2013 was an
operating loss of $6.1 million and non-cash expense of $3.1 million
compared to an operating loss of $7.1 million and non-cash expense of
$108.4 million in the net loss for the first quarter of 2012. The
non-cash expense is related to the increase in fair value of the
Company's outstanding and exercised warrants and was classified as
other income (expense).  
Threshold recognized revenue of $2.9 million in the first quarter of
2013 compared to $0.3 million in first quarter of 2012, which related
to the amortization of upfront and milestone payments from its global
license and co-development agreement for TH-302 with Merck KGaA,
Darmstadt, Germany, which includes an option for Threshold to
co-commercialize in the U.S. During the first quarter of 2013
Threshold earned a $30 million milestone payment related to the
initiation of a global Phase 3 study of TH-302 in combination with
gemcitabine in patients with previously untreated, locally advanced
unresectable or metastatic pancreatic adenocarcinoma. To date, the
Company has received $97.5 million in upfront and milestone payments.
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. Threshold could receive
an additional $12.5 million in potential milestone payments in 2013. 
Research and development expenses were $6.5 million for the first
quarter of 2013 compared to $5.7 million for the first quarter of
2012. The increase in research and development expenses is due
primarily to a $2.0 million increase in clinical development expenses
and an increase of $1.1 million in consulting and employee related
expenses, partially offset by a $2.3 million increase in
reimbursement for Merck KGaA's 70% share of total development
expenses for TH-302.  
General and administrative expenses were $2.5 million for the first
quarter of 2013 versus $1.7 million for the first quarter of 2012.
The increase in general and administrative expenses was due primarily
to an increase in employee related expenses to support the Company's
ongoing collaboration with Merck KGaA.  
Non-cash stock-based compensation expense included in total operating
expenses was $1.1 million for the first quarter of 2013 versus $0.4
million for the first quarter of 2012. The increase in stock-based
compensation expense is due to the amortization of a greater number
of options with higher fair values. 
As of March 31, 2013, and December 31, 2012 Threshold had $104.2
million and $70.8 million in cash, cash equivalents and marketable
securities, respectively. The net increase in cash, cash equivalents
and marketable securities during the first quarter of 2013 is
primarily due to the $42.5 million in milestone payments received
from Threshold's collaboration with Merck KGaA, partially offset by
the Company's operating cash requirements for the first quarter of
2013. 
First Quarter 2013 Key Achievements 
In January 2013, Threshold announced that the Company's partner Merck
KGaA, through its division Merck Serono, initiated the global Phase 3
MAESTRO (MetastAtic or unrESectable pancreaTic adenocaRcinOma) study
assessing the efficacy and safety of TH-302 in combination with
gemcitabine in patients with previously untreated, locally advanced
unresectable or metastatic pancreatic adenocarcinoma. In the U.S.,
the study is being conducted by EMD Serono Inc. under a Special
Protocol Assessment agreement with the U.S. Food and Drug
Administration (FDA). 
In March 2013, Threshold announced the acquisition of [18F]-HX4
[flortanidazole (18F)] from Siemens Healthcare. [18F]-HX4 is an
investigational radiolabeled hypoxia Positron Emission Tomography
(PET) tracer developed by Siemens Healthcare Molecular Imaging to
potentially identify and quantify the degree of hypoxia in tumors in
vivo. Threshold initially intends to develop [18F]-HX4 to determine
an individual patient's tumor hypoxia profile, which may identify
patients who will best respond to the company's hypoxia-targeted
therapeutics. Threshold does not expect the acquisition of, or
development activities related to, [18F]-HX4 to have a material
impact on results of operations in 2013. 
About TH-302 
TH-302 is an investigational hypoxia-targeted drug that is designed
to be activated under severe tumor hypoxic conditions, a hallmark of
many cancers. Areas of low oxygen levels (hypoxia) in solid tumors
are due to insufficient blood supply as a result of aberrant
vasculature. Similarly, the bone marrow of patients with
hematological malignancies has also been shown, in some cases, to be
severely hypoxic. 
TH-302 is currently under evaluation in two Phase 3 trials: one in
combination with doxorubicin versus doxorubicin alone in patients
with soft tissue sarcoma (STS), and the other in combination with
gemcitabine versus gemcitabine and placebo in patients with advanced
pancreatic cancer. Both Phase 3 trials are being conducted under a
Special Protocol Assessment agreement with the U.S. Food and Drug
Administration (FDA). The FDA and the European Commission have
granted TH-302 Orphan Drug Designation for the treatment of STS.
TH-302 is also being investigated in hematological malignancies and
other combination trials in solid tumors. 
Merck KGaA signed a global license and co-development agreement for
TH-302 with Threshold in February 2012, which includes an option for
Threshold to co-commercialize in the U.S. 
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 that 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 the potential uses and benefits of TH-302, anticipated
milestones, clinical trial plans, 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,
the results of such clinical trials (including product safety issues
and efficacy results), issues arising in manufacturing TH-302, Merck
KGaA's continued participation in the development of TH-302, and
actions of regulatory authorities, including the United States Food
and Drug Administration. Forward-looking statements in this press
release also include potential uses and benefits of [18F]-HX4 to
identify patients with tumor hypoxia and contribute to therapy for
such patients, and development plans for [18F]-HX4 as a companion
diagnostic. 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 conduct or
manage clinical trials of [18F]-HX4, Threshold's ability to obtain
regulatory approval for [18F]-HX4 as a diagnostic, and Threshold's
ability to continue development of [18F]-HX4. Further information
regarding risks faced by Threshold is included under the heading
"Risk Factors" in Threshold's Annual Report on Form 10-K, which has
been filed with the Securities and Exchange Commission on March 7,
2013 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     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Revenue                                          $      2,922  $        252 
                                                                            
Operating expenses                                                          
  Research and development                              6,468         5,687 
  General and administrative                            2,515         1,708 
                                                 ------------  ------------ 
      Total Operating Expenses                          8,983         7,395 
                                                                            
    Loss from operations                               (6,061)       (7,143)
                                                                            
  Interest income (expense), net                           36             1 
  Other Income (expense), net (1)                      (3,116)     (108,391)
                                                 ------------  ------------ 
  Loss before provision for income taxes               (9,141)     (115,533)
  Provision for income taxes                               73             - 
                                                 ------------  ------------ 
    Net loss                                           (9,214)     (115,533)
                                                 ============  ============ 
                                                                            
Net loss per common share-basic and diluted      $      (0.16) $      (2.30)
                                                 ============  ============ 
                                                                            
Weighted-average shares used in computing basic                             
 and diluted net loss per common share                 56,486        50,326 
                                                 ============  ============ 
                                                                            
(1) Non-cash expense related to the change in fair value of the Company's   
    outstanding and exercised warrants, classified as other income          
    (expense).                                                              
                                                                            
                                                                            
                                                                            
                       THRESHOLD PHARMACEUTICALS, INC.                      
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                                (in thousands)                              
                                                                            
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                  (unaudited)       (1)     
Assets                                                                      
                                                                            
  Cash, cash equivalents and marketable                                     
   securities                                    $    104,238  $     70,848 
  Collaboration Receivable                              6,653        15,635 
  Prepaid expenses and other current assets             1,162         1,167 
  Property and equipment, net                             760           812 
  Other assets                                          1,059         1,059 
                                                 ------------  ------------ 
    Total assets                                 $    113,872  $     89,521 
                                                 ============  ============ 
                                                                            
Liabilities and stockholders' equity                                        
                                                                            
  Total current liabilities (2)                  $     23,790  $     17,451 
  Deferred Revenue                                     75,989        53,097 
  Long-term liabilities (3)                            35,908        32,826 
  Stockholders' equity (deficit)                      (21,815)      (13,853)
                                                 ------------  ------------ 
  Total liabilities and stockholders' equity                                
   (deficit)                                     $    113,872  $     89,521 
                                                 ============  ============ 
                                                                            
                                                                            
(1) Derived from audited financial statements.                              
                                                                            
(2) Amount includes current portion of deferred revenue of $12.7 million and
    $8.5 million as of March 31, 2013 and December 31, 2012, respectively.  
                                                                            
(3) Includes as of March 31, 2013 and December 31, 2012, $35.6 million and  
    $32.6 million of warrant liability, respectively.                       

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