On November 2, 2015 Threshold Pharmaceuticals, Inc. (NASDAQ: THLD) reported financial results for the third quarter 2015 (Filing, 8-K, Threshold Pharmaceuticals, NOV 2, 2015, View Source [SID:1234507877]). Revenue for the third quarter ended September 30, 2015 was $3.7 million. The operating loss for the third quarter ended September 30, 2015 was $6.8 million. The net loss for the third quarter ended September 30, 2015 was $6.4 million, which included the operating loss of $6.8 million and non-cash income of $0.3 million related to the changes in fair value of the Company’s outstanding warrants and was classified as other income (expense). As of September 30, 2015, Threshold had $56.4 million in cash, cash equivalents and marketable securities, with no debt outstanding.
"This is an exciting time for Threshold as we anticipate announcing top-line results from the two pivotal Phase 3 clinical trials of evofosfamide in patients with advanced soft tissue sarcoma (TH-CR-406) and in patients with advanced pancreatic cancer (MAESTRO) around the end of this year," said Barry Selick, Ph.D., Chief Executive Officer at Threshold. "In the third quarter, we also made significant progress with tarloxotinib, our exclusively-licensed hypoxia-activated EGFR tyrosine kinase inhibitor, with the initiation of two proof-of-concept Phase 2 clinical trials. We expect to have preliminary data from those trials in the first half of 2016."
Third Quarter 2015 Financial and Operational Results
Revenue of $3.7 million was recognized for both the third quarter of 2015 and 2014. Revenue is related to the amortization of the aggregate of $110 million in upfront and milestone payments earned in 2013 and 2012 from Threshold’s collaboration with Merck KGaA, Darmstadt, Germany, for evofosfamide (previously known as TH-302). The revenue from the upfront and milestone payments earned under the agreement is being amortized over the relevant performance period, rather than being immediately recognized when the upfront and milestone payments are earned or received.
The net loss for the third quarter of 2015 was $6.4 million compared to a net loss of $7.7 million for the third quarter of 2014. Included in the net loss for the third quarter of 2015 was an operating loss of $6.8 million and non-cash income of $0.3 million compared to an operating loss of $7.6 million and non-cash expense of $0.3 million included in the net loss for the third quarter of 2014. The non-cash income or expense is related to the change in fair value of the Company’s outstanding warrants and was classified as other income (expense).
Research and development expenses were $8.1 million for the third quarter of 2015 compared to $8.9 million for the third quarter of 2014. The decrease in research and development expenses was due primarily to a $1.1 million net decrease in clinical development expenses, net of reimbursement from Merck KGaA, Darmstadt, Germany related to their 70% share of total development expenses for evofosfamide. The decrease in clinical development expenses was due to a decrease in clinical development expenses for evofosfamide, partially offset by an increase in clinical development expenses for tarloxotinib.
General and administrative expenses were $2.4 million for both the third quarter of 2015 and 2014.
Non-cash stock-based compensation expense included in total operating expenses was $1.5 million for the third quarter of 2015 versus $1.2 million for the third quarter of 2014. The increase in stock-based compensation expense was due to the amortization of a greater number of options with higher fair values.
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As of September 30, 2015 and June 30, 2015, Threshold had $56.4 million and $67.0 million in cash, cash equivalents and marketable securities, respectively. The net decrease of $10.6 million in cash, cash equivalents and marketable securities during the third quarter of 2015 was primarily due to the Company’s operating cash requirements for the third quarter of 2015.
Corporate Highlights
Announced the appointment of Mark Hopkins, J.D., Ph.D., as Vice President of Intellectual Property and Assistant General Counsel. In this newly created position, Dr. Hopkins oversees worldwide intellectual property strategy and activities related to further advancement of Threshold’s intellectual property portfolio for its investigational anti-cancer therapeutics, evofosfamide and tarloxotinib, and hypoxia-activated prodrug technology. Dr. Hopkins is also responsible for oversight of corporate legal matters at Threshold.
Threshold- and Merck KGaA, Darmstadt, Germany-Sponsored Trials of Evofosfamide: Clinical Development Highlights and Outlook
Announce top-line data from the two pivotal Phase 3 clinical trials. The companies are focused on efficient execution of the two Phase 3 clinical trials of evofosfamide: one in patients with advanced soft tissue sarcoma (TH-CR-406) and the other in patients with advanced pancreatic cancer ("MAESTRO"). The current expectations are that top-line data will be announced around the end of 2015 for both trials and that the companies will prepare for potential submission of marketing applications, assuming the data from the trials are supportive.
Continue enrollment in the Phase 2 non-squamous non-small cell lung cancer clinical trial. Threshold is conducting a 440-patient, randomized, double-blind, placebo-controlled trial of evofosfamide in combination with pemetrexed in patients with second-line advanced non-squamous non-small cell lung cancer. This international Phase 2 clinical trial is designed to support registration and will compare the combination of evofosfamide plus pemetrexed versus pemetrexed plus placebo as second-line therapy in this patient population. Overall survival is the primary endpoint. Enrollment in the trial is ongoing.
Commence enrollment in final cohort of the Phase 1/2 multiple myeloma clinical trial. Threshold plans to initiate dosing with the combination of evofosfamide, dexamethasone, and Pomalyst (pomalidomide, an immunomodulatory drug) in up to 38 patients with relapsed/refractory multiple myeloma in the final cohort of its ongoing Phase 1/2 trial. A total of 62 patients have been enrolled in the trial in which the safety and efficacy of evofosfamide plus dexamethasone with or without Velcade (bortezomib, a proteasome inhibitor) was assessed.
Threshold-Sponsored Trials of Tarloxotinib Bromide*: Clinical Development Highlights and Outlook
Initiated patient dosing in Phase 2 non-small cell lung cancer clinical trial. In August, Threshold announced that the Company, in collaboration with the Academic Thoracic Oncology Medical Investigators Consortium (ATOMIC), initiated the first Phase 2 clinical trial of tarloxotinib for the treatment of patients with mutant epidermal growth factor receptor (EGFR) non-small cell lung cancer who have been previously treated with an EGFR tyrosine kinase inhibitor and are progressing on treatment, but have not acquired the T790M resistance mutation. The trial is expected to enroll up to 37 patients; preliminary data are expected to be available in the first half of 2016.
Initiated patient dosing in Phase 2 squamous cell carcinomas clinical trial. In August, Threshold announced initiation of dosing in a Phase 2 clinical trial of tarloxotinib for the treatment of patients with recurrent or metastatic squamous cell carcinoma of the head and neck or skin. The trial is expected to enroll up to 69 patients; preliminary data are expected to be available in the first half of 2016.
About Evofosfamide
Evofosfamide (previously known as TH-302) is an investigational hypoxia-activated prodrug that is thought to be 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.
Evofosfamide is currently in two Phase 3 trials, both of which are fully recruited: one in combination with doxorubicin versus doxorubicin alone in patients with locally advanced unresectable or metastatic soft tissue sarcomas (STS) (the TH-CR-406 trial), and the other in combination with gemcitabine versus gemcitabine and placebo in patients with locally advanced unresectable or metastatic pancreatic cancer (the MAESTRO trial). Both Phase 3 trials are being conducted under Special Protocol Assessment (SPA) agreements with the FDA. The FDA and the European Commission have granted evofosfamide Orphan Drug designation for the treatment of STS and pancreatic cancer. The FDA has also granted Fast Track designation for evofosfamide for both STS and pancreatic cancer. Evofosfamide is also being investigated in a Phase 2 trial designed to support registration for the treatment of non-squamous non-small cell lung cancer, and in earlier-stage clinical trials of other solid tumors and hematological malignancies.
Threshold has a global license and co-development agreement for evofosfamide with Merck KGaA, Darmstadt, Germany, which includes an option for Threshold to co-commercialize in the U.S.
About Tarloxotinib Bromide
Tarloxotinib bromide, or "tarloxotinib", is a prodrug designed to selectively release a covalent (irreversible) EGFR tyrosine kinase inhibitor under severe hypoxia, a feature of many solid tumors. Accordingly, tarloxotinib has the potential to effectively shut down aberrant EGFR signaling in a tumor-selective manner, thus potentially avoiding or reducing the systemic side effects associated with currently available EGFR tyrosine kinase inhibitors. Tarloxotinib is currently being evaluated in two Phase 2 proof-of-concept trials: one for the treatment of patients with mutant EGFR-positive, T790M-negative advanced non-small cell lung cancer progressing on an EGFR tyrosine kinase inhibitor, and the other for patients with recurrent or metastatic squamous cell carcinomas of the head and neck or skin. Threshold licensed exclusive worldwide rights to tarloxotinib from the University of Auckland, New Zealand, in September 2014.