Threshold Pharmaceuticals Reports Third Quarter 2013 Financial and Operational Results

Threshold Pharmaceuticals Reports Third Quarter 2013 Financial and Operational 
Results 
SOUTH SAN FRANCISCO, CA -- (Marketwired) -- 11/04/13 --  Threshold
Pharmaceuticals, Inc. (NASDAQ: THLD), today reported financial
results for the third quarter of 2013. Revenue for the third quarter
ended September 30, 2013 was $3.2 million. The operating loss for the
third quarter ended September 30, 2013 was $5.2 million. The net
income for the third quarter ended September 30, 2013 was $1.2
million, which included the operating loss of $5.2 million and
non-cash income of $6.4 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, 2013,
Threshold had $91.9 million in cash, cash equivalents and marketable
securities, with no debt outstanding. 
"Our pivotal Phase 3 trial of TH-302 in soft tissue sarcoma has
continued to enroll well and we remain on track to complete the
enrollment of all 620 patients around the end of this year," said
Barry Selick, Ph.D., Chief Executive Officer of Threshold. "In
addition, early data from studies evaluating TH-302 in combination
with antiangiogenics show preliminary signals of activity in patients
with treatment-resistant tumors that warrants further investigation.
We are also looking forward to reporting data on TH-302 in
glioblastoma, multiple myeloma, and advanced leukemias at medical
meetings later this year as well as to initiating trials in new
indications." 
Third Quarter 2013 Financial and Operational Results 
The net income for the third quarter of 2013 was $1.2 million
compared to a net loss of $1.0 million for the third quarter of 2012.
Included in the net income for the third quarter of 2013 was an
operating loss of $5.2 million and non-cash income of $6.4 million
compared to an operating loss of $4.0 million and non-cash income of
$3.0 million in the net loss for the third quarter of 2012. 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).  
Threshold recognized revenue of $3.2 million in the third quarter of
2013 compared to $1.8 million in third 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 potential milestone payment in 2013. 
Research and development expenses were $6.4 million for the third
quarter of 2013 compared to $4.0 million for the third quarter of
2012. The increase in research and development expenses, net of
reimbursement for Merck's 70% share of total development expenses for
TH-302, is due primarily to a $1.5 million increase in clinical
development expenses and an increase of $0.7 million in employee
related expenses, including a $0.2 million increase in non-cash
stock-based compensation expense.  
General and administrative expenses were $2.1 million for the third
quarter of 2013 versus $1.7 million for the third 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, including $0.1 million increase in
non-cash stock-based compensation expense.  
Non-cash stock-based compensation expense included in total operating
expenses was $1.2 million for the third quarter of 2013 versus $0.9
million for the third 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 September 30, 2013, Threshold had $91.9 million in cash, cash
equivalents and marketable securities, a decrease of $6.3 million
during the third quarter of 2013. The net decrease in cash, cash
equivalents and marketable securities during the third quarter of
2013 is primarily due to the Company's operating cash requirements
for the third quarter of 2013, partially offset by receipt of $2.5
million from Merck for its 70% share of total development expenses
for TH-302 for the second quarter of 2013, as well as $1.3 million
from the exercise of warrants and stock options. 
Third Quarter 2013 Key Achievements 
In August 2013, Threshold announced the initiation of a single-arm,
multi-center Phase 2 trial investigating the clinical efficacy and
safety of TH-302 administered in up to 40 patients with advanced
melanoma. The primary endpoint is three-month progression-free
survival. Secondary endpoints include response rate, duration of
response, overall survival, safety and evaluation of potential
imaging, serum, and tissue biomarkers that may be associated with
tumor response and predict efficacy and safety of TH-302 therapy.  
In October 2013, Threshold announced early clinical data from two
single-arm, open-label Phase 1 trials evaluating TH-302 in
combination with antiangiogenic agents for the treatment of advanced
solid tumors. New data from an investigator-sponsored trial (Study
4001) in patients with advanced solid tumors showed that combination
treatment with TH-302 plus Votrient(R) (pazopanib) achieved a
clinical benefit rate of 76% (partial response rate of 12% plus
stable disease rate of 64%). Updated data from a company-sponsored
trial (Study 410) in patients with renal cell carcinoma (RCC) and
gastrointestinal stromal tumors (GIST) showed that three of eight
patients with RCC and one of four patients with GIST achieved partial
responses to treatment with TH-302 plus Sutent(R) (sunitinib).
Results for Studies 410 and 4001 were presented at the 2013
AACR-NCI-EORTC International Conference on Molecular Targets and
Cancer Therapeutics in Boston, Massachusetts (Abstracts #B77 and
#C61, respectively).  
Preclinical data on the combination of TH-302 with Gemzar(R)
(gemcitabine) and Abraxane(R) (nab-paclitaxel) in xenograft models of
pancreatic cancer were also presented at the meeting (Abstract
#C287). Greater anti-tumor activity was associated with the "triplet"
combination of TH-302 plus gemcitabine plus nab-paclitaxel compared
with that of the "doublet" combination of gemcitabine plus
nab-paclitaxel. No additive hematological toxicity or peripheral
neuropathy was observed with the triplet as compared with the
doublet.  
In October 2013 at the annual meeting of the Sarcoma Alliance through
Collaboration and Research (SARC) in New York, NY, William D. Tap,
M.D., Section Chief, Sarcoma Oncology at Memorial Sloan-Kettering
Cancer Center and Principal Investigator of the Phase 3 trial of
TH-302 in combination with doxorubicin in patients with advanced soft
tissue sarcoma (Study 406) provided an update on enrollment. A total
of 517 patients were enrolled in mid-October as reported by Dr. Tap
on October 31, 2013; a total of 620 patients are expected to be
enrolled. 
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, 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 soft
tissue sarcoma and pancreatic cancer. 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 of enrollment of the Phase 3 trial of TH-302 in
patients with advanced soft tissue sarcoma, a potential milestone
payment from Merck KGaA, potential commencement of clinical trials
for new indications, other potential clinical trial results 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,
potential disagreements with Merck KGaA regarding the commencement of
additional clinical trials or milestone payments, 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
August 1, 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   Nine Months Ended 
                                        September 30,       September 30,   
                                     ------------------  ------------------ 
                                       2013      2012      2013      2012   
                                     --------  --------  --------  -------- 
                                                                            
                                                                            
Revenue                              $  3,181  $  1,797  $  9,283  $  3,846 
                                                                            
Operating expenses                                                          
  Research and development              6,350     4,039    20,801    12,623 
  General and administrative            2,051     1,741     6,732     5,229 
                                     --------  --------  --------  -------- 
      Total Operating Expenses          8,401     5,780    27,533    17,852 
                                     --------  --------  --------  -------- 
                                                                            
    Loss from operations               (5,220)   (3,983)  (18,250)  (14,006)
                                                                            
Interest income (expense), net             34        25       104        55 
Other income (expense) (1)              6,379     2,967    (2,559)  (85,572)
                                     --------  --------  --------  -------- 
    Income (loss) before provision                                          
     for taxes                          1,193      (991)  (20,705)  (99,523)
Provision for income taxes                 17         -       121         - 
                                     --------  --------  --------  -------- 
    Net Income (loss)                $  1,176  $   (991) $(20,826) $(99,523)
                                     ========  ========  ========  ======== 
                                                                            
Net income (loss) per common share                                          
  Basic                              $   0.02  $  (0.02) $  (0.36) $  (1.86)
                                     ========  ========  ========  ======== 
  Diluted                            $  (0.08) $  (0.06) $  (0.36) $  (1.86)
                                     ========  ========  ========  ======== 
                                                                            
Weighted-average shares used in per                                         
 common                                                                     
share calculation:                                                          
  Basic                                58,542    55,654    57,362    53,516 
                                     ========  ========  ========  ======== 
  Diluted                              63,561    64,405    59,871    53,516 
                                     ========  ========  ========  ======== 
                                                                            
(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,  
                                                   2013           2012      
                                              -------------  -------------- 
                                               (unaudited)         (1)      
Assets                                                                      
                                                                            
 Cash, cash equivalents and marketable                                      
  securities                                  $      91,914  $       70,848 
 Collaboration Receivable                             5,545          15,635 
 Prepaid expenses and other current assets            1,819           1,167 
 Property and equipment, net                            708             812 
 Other assets                                         1,059           1,059 
                                              -------------  -------------- 
  Total assets                                $     101,045  $       89,521 
                                              =============  ============== 
                                                                            
Liabilities and stockholders' equity                                        
                                                                            
 Total current liabilities (2)                $      24,877  $       17,451 
 Deferred Revenue                                    69,628          53,097 
 Long-term liabilities (3)                           24,040          32,826 
 Stockholders' equity (deficit)                     (17,500)        (13,853)
                                              -------------  -------------- 
 Total liabilities and stockholders' equity                                 
  (deficit)                                   $     101,045  $       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 September 30, 2013 and December 31, 2012,            
    respectively.                                                           
(3) Includes as of September 30, 2013 and December 31, 2012, $23.8 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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