Threshold Pharmaceuticals Reports Second Quarter 2013 Financial and Operational Results

Threshold Pharmaceuticals Reports Second Quarter 2013 Financial and Operational 
Results 
SOUTH SAN FRANCISCO, CA -- (Marketwired) -- 08/01/13 --  Threshold
Pharmaceuticals, Inc. (NASDAQ: THLD), today reported financial
results for the second quarter of 2013. Revenue for the second
quarter ended June 30, 2013 was $3.2 million. The operating loss for
the second quarter ended June 30, 2013 was $7.0 million. The net loss
for the second quarter ended June 30, 2013 was $12.8 million, which
included the operating loss of $7.0 million and non-cash expense of
$5.8 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 June 30, 2013, Threshold had $98.2 million in cash,
cash equivalents and marketable securities, with no debt outstanding. 
"Threshold continues to make important clinical progress with
TH-302," said Barry Selick, Ph.D., Chief Executive Officer of
Threshold. "During the second quarter, we successfully implemented
protocol changes under the existing Special Protocol Agreement
intended to strengthen our phase 3 trial in patients with soft tissue
sarcoma. At ASCO, we reported initial data from two early-stage
trials showing responses in patients with multiple myeloma as well as
renal cell carcinoma and gastrointestinal stromal tumors. We look
forward to additional data presentations at medical meetings later
this year." 
Second Quarter 2013 Financial and Operational Results 
The net loss for the second quarter of 2013 was $12.8 million
compared to a net income of $17.0 million for the second quarter of
2012. Included in the net loss for the second quarter of 2013 was an
operating loss of $7.0 million and non-cash expense of $5.8 million
compared to an operating loss of $2.9 million and non-cash income of
$19.9 million in the net income for the second quarter of 2012. The
non-cash income or expense is related to the change in fair value of
the Company's outstanding and exercised warrants and was classified
as other income (expense).  
Threshold recognized revenue of $3.2 million in the second quarter of
2013 compared to $1.8 million in second 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. 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 $8.0 million for the second
quarter of 2013 compared to $2.9 million for the second quarter of
2012. The increase in research and development expenses, net of
reimbursement for Merck KGaA's 70% share of total development
expenses for TH-302, is due primarily to a $4.1 million increase in
clinical development expenses and an increase of $1.0 million in
employee related expenses, including a $0.3 million increase in
non-cash stock-based compensation expense.  
General and administrative expenses were $2.2 million for the second
quarter of 2013 versus $1.8 million for the second 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, including $0.2 million
increase in non-cash stock-based compensation expense.  
Non-cash stock-based compensation expense included in total operating
expenses was $1.3 million for the second quarter of 2013 versus $0.7
million for the second 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 June 30, 2013, Threshold had $98.2 million in cash, cash
equivalents and marketable securities, a decrease of $6 million
during the second quarter of 2013. The net decrease in cash, cash
equivalents and marketable securities during the second quarter of
2013 is primarily due to the Company's operating cash requirements
for the second quarter of 2013, partially offset by receipt of the
$3.5 million reimbursement payment related to Merck KGaA's 70% share
of total development expenses for TH-302, for first quarter of 2013. 
Second Quarter 2013 Key Achievements 
In June 2013, Threshold announced data from two ongoing Phase 1/2
trials evaluating TH-302, an investigational hypoxia-targeted drug,
at the 49th Annual Meeting of the American Society of Clinical
Oncology (ASCO), which was held in Chicago, Ill., May 31 through June
4. Updated results from a Phase 1/2 study of TH-302 plus
dexamethasone in patients with relapsed/refractory multiple myeloma
were presented supplementing the data published in the meeting
abstract (Abstract #8602). Of 12 evaluable patients, two achieved
partial responses (PRs) and two minimal responses (MRs) for a
clinical benefit rate (MR or better) of 33%. In a Phase 1/2 clinical
trial of TH-302 administered in combination with the antiangiogenic
therapy sunitinib, one of four patients with gastrointestinal stromal
tumors (GIST) achieved a confirmed PR, and three of four patients
with renal cell carcinoma (RCC) achieved PRs. Data from this study
were published in an abstract included online in the ASCO 2013 Annual
Meeting Proceedings (Abstract # e15557).  
In July 2013, Threshold announced a protocol amendment to the
Company's pivotal Phase 3 trial of TH-302 in patients with advanced
soft tissue sarcoma (see Company news release dated July 1, 2013 in
the Investors/News Releases section
http://investor.thresholdpharm.com/releases.cfm of the Company's
website and related information in the Investors/Webcasts section
http://investor.thresholdpharm.com/events.cfm). The changes to the
protocol are based on new assumptions related to the performance of
current standard of care in soft tissue sarcoma, as well as a higher
than anticipated rate of enrollment, and are intended to strengthen
the ability of the study to detect a clinically meaningful and
statistically significant effect of TH-302 on overall survival. The
U.S. Food and Drug Administration (FDA) agreed to the amendment under
the existing Special Protocol Agreement.  
About TH-302 
TH-302 is an investigational hypoxia-targeted drug that is designed
to be activated under 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 (MAESTRO). Both Phase 3 trials are being conducted
under Special Protocol Agreements 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
in combination with other therapies in a variety of solid tumors. 
Threshold has a 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. 
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 timing and potential results of the Phase 3 trial of
TH-302 in patients with advanced soft tissue sarcoma, including a
potential interim analysis, rate of patient enrollment in the Phase 3
trial of TH-302 in patients with advanced soft tissue sarcoma, and
potential therapeutic uses and benefits of TH-302 to treat patients
with soft tissue sarcoma, multiple myeloma, gastrointestinal stromal
tumors, renal cell carcinoma, or other cancers. 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,
the ability to enroll or complete anticipated clinical trials, the
time and expense required to conduct such clinical trials and analyze
data, whether later trials confirm the results of earlier trials,
whether the Phase 3 trial data is sufficient to support regulatory
approval to market TH-302, and 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 and Exchange Commission on
May 2, 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     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Revenue                          $   3,180  $   1,797  $   6,102  $   2,049 
                                                                            
Operating expenses                                                          
  Research and development           7,983      2,897     14,451      8,584 
  General and administrative         2,166      1,780      4,681      3,488 
                                 ---------  ---------  ---------  --------- 
      Total Operating Expenses      10,149      4,677     19,132     12,072 
                                 ---------  ---------  ---------  --------- 
                                                                            
    Loss from operations            (6,969)    (2,880)   (13,030)   (10,023)
                                                                            
  Interest income (expense), net        34         29         70         30 
  Other income (expense) (1)        (5,822)    19,852     (8,938)   (88,539)
                                 ---------  ---------  ---------  --------- 
    Income (loss) before                                                    
     provision for taxes         $ (12,757) $  17,001  $ (21,898) $ (98,532)
  Provision for income taxes            31          -        104          - 
                                 ---------  ---------  ---------  --------- 
    Net Income (loss)              (12,788)    17,001    (22,002)   (98,532)
                                 =========  =========  =========  ========= 
                                                                            
Net income (loss) per common                                                
 share                                                                      
  Basic                          $   (0.22) $    0.31  $   (0.39) $   (1.88)
                                 =========  =========  =========  ========= 
  Diluted                        $   (0.22) $   (0.04) $   (0.39) $   (1.88)
                                 =========  =========  =========  ========= 
                                                                            
Weighted-average shares used in                                             
 per common share calculation:                                              
  Basic                             57,037     54,549     56,763     52,435 
                                 =========  =========  =========  ========= 
  Diluted                           57,037     63,494     56,763     52,435 
                                 =========  =========  =========  ========= 
                                                                            
(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)                               
                                                                            
                                                  June 30,     December 31, 
                                                    2013           2012     
                                               -------------  ------------- 
                                                (unaudited)        (1)      
Assets                                                                      
                                                                            
  Cash, cash equivalents and marketable                                     
   securities                                  $      98,212  $      70,848 
  Collaboration Receivable                             2,548         15,635 
  Prepaid expenses and other current assets            1,913          1,167 
  Property and equipment, net                            773            812 
  Other assets                                         1,059          1,059 
                                               -------------  ------------- 
    Total assets                               $     104,505  $      89,521 
                                               =============  ============= 
                                                                            
Liabilities and stockholders' equity                                        
                                                                            
  Total current liabilities (2)                $       9,944  $      17,451 
  Deferred Revenue                                    85,531         53,097 
  Long-term liabilities (3)                           34,240         32,826 
  Stockholders' equity (deficit)                     (25,210)       (13,853)
                                               -------------  ------------- 
  Total liabilities and stockholders' equity                                
   (deficit)                                   $     104,505  $      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 June 30, 2013 and December 31, 2012, respectively.   
(3) Includes as of June 30, 2013 and December 31, 2012, $34.0 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 
 
 
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