-- Recently proposed merger with Molecular
Templates will result in Nasdaq-listed company focused on
developing novel treatments for cancer --
Threshold Pharmaceuticals, Inc. (Nasdaq:THLD), a clinical-stage
biopharmaceutical company developing novel therapies for cancer,
today reported financial results for the fourth quarter and full
year ended December 31, 2016 and provided an update on the
Company's corporate and clinical development activities, including
the proposed merger with Molecular Templates, Inc.
Threshold announced on March 17, 2017 that it had entered into a
definitive agreement under which Molecular Templates will merge
with a wholly owned subsidiary of Threshold in an all-stock
transaction. The transaction will result in a combined company
focused on the development of novel treatments for cancer.
Longitude Capital, a U.S. based venture capital firm, will invest
$20 million at the close of the transaction, subject to certain
conditions, including the receipt of additional equity financing
commitments of an additional $20 million.
Barry Selick, Ph.D., Chief Executive Officer of Threshold, said,
“On behalf of the Company and the entire board of directors, I’d
like to thank Threshold shareholders for their support while we
conducted our extensive and thorough review of strategic
alternatives, after very challenging clinical outcomes for
evofosfamide and tarloxotinib.” Dr. Selick further stated, “We
believe Molecular Templates’ lead product candidate, MT-3724, and
our lead product candidate, evofosfamide, in addition to Molecular
Templates’ innovative technology platform will result in a combined
company that has significant value for its stakeholders.”
Recent HighlightsAbout the Proposed
MergerThe transaction has been approved by the board of
directors of both companies. The merger is expected to close in the
second quarter of 2017, subject to the approval of the stockholders
of each company as well as other customary conditions. Upon closing
of the transaction, Threshold will change its name to Molecular
Templates, Inc. and plans to change its ticker symbol on the Nasdaq
Capital Market to MTEM. On a pro forma basis and based upon the
number of shares of common stock to be issued in the merger,
current Threshold shareholders would own approximately 34.4 percent
of the combined company and current Molecular Templates
shareholders would own approximately 65.6 percent of the combined
company although the actual allocation will be subject to
adjustment based on Threshold’s net cash balance.
Eric Poma, Ph.D., Chief Executive Officer of Molecular
Templates, will become Chief Executive Officer of the combined
company. Following the merger, the board of directors of the
combined company will consist of seven seats and will be comprised
of two representatives from Molecular Templates, two
representatives from Threshold, and three representatives to be
mutually agreed upon by Molecular Templates and Threshold. The
Company’s current chairman of the board of directors, Barry Selick,
Ph.D., will become chairman of the board of the combined company
following the merger.
Evofosfamide The Company’s lead product
candidate is an investigational hypoxia-activated prodrug that is
designed to be activated under tumor hypoxic conditions, a hallmark
of many cancers. Recent updates include:
- Held first meeting with the Japanese PMDA (Pharmaceutical and
Medical Devices Agency) to present the improvement in overall
survival that was observed in the Japanese sub-population of
the MAESTRO Phase 3 trial. While the PMDA indicated that the
current analysis of the MAESTRO data is not sufficient to support
the submission of a New Drug Application (“NDA”) in Japan, the
Company is in ongoing discussions with the PMDA to clarify the
scope of an additional study, the results of which may then support
the submission of an NDA for evofosfamide in Japan.
- Investigator-sponsored and cooperative group clinical trials
investigating evofosfamide in patients with pancreatic
neuroendocrine tumors (pNET), recurrent glioblastoma (GBM) and
hepatocellular carcinoma (HCC) and advanced biliary tract cancer
(BCT) remain ongoing
- In the second quarter, the Company plans to commence a Phase 1
clinical trial evaluating evofosfamide in combination with the
immune checkpoint antibody, ipilumumab, at the M.D. Anderson Cancer
Center in Houston Texas to potentially improve the efficacy of
immune checkpoint antibody as an anti-cancer therapy.
TH-3424TH-3424 is the Company’s small-molecule
drug candidate being evaluated for the treatment of hepatocellular
(liver) cancer (HCC), castrate resistant prostate cancer (CRPC),
T-cell acute lymphoblastic leukemias (T-ALL), and other cancers
expressing high levels of aldo-keto reductase family 1 member C3
(AKR1C3). Tumors overexpressing AKR1C3 can be resistant to
radiation therapy, chemotherapy and anti-androgen therapy. TH-3424
is a prodrug that selectively releases a potent DNA cross-linking
agent in the presence of AKR1C3. Recent updates include:
- Entered into a collaboration with the National Cancer Institute
(NCI) to explore the effects of TH-3424 against T-ALL xenograft
cell lines with high AKR1C3 expression. The studies will be
conducted through the NCI-funded Pediatric Preclinical Testing
Program (PPTp). Threshold will supply TH-3424, and the NCI will
fund the studies that will be conducted at the PPTP leukemia
research sites.
- Investigational New Drug (IND)-enabling studies of TH-3424 have
been initiated in collaboration with Ascenta Pharmaceuticals,
Ltd.
Fourth Quarter and Year End 2016 Financial
Results
- As of December 31, 2016 and 2015, Threshold had $23.6 million
and $48.7 million in cash, cash equivalents and marketable,
respectively. The net decrease of $25.1 million was a result of
operating cash requirements for the year ended December 31,
2016.
- No revenue was recognized in the fourth quarter and year ended
December 31, 2016 compared to $65.9 million and $76.9 million for
the same periods in 2015. Revenue for the quarter and year ended
December 31, 2015 related to the amortization of the aggregate of
$110 million in upfront and milestone payments received from the
Company’s former collaboration with Merck KGaA, Darmstadt, Germany.
The revenue from the upfront payment and milestone payments
received under the agreement were previously being amortized over
the relevant performance period, rather than being immediately
recognized when the upfront payment and milestones were earned or
received. As a result of Merck KGaA, Darmstadt, Germany's and the
Company’s decision to cease further joint development of
evofosfamide in December 2015, the Company immediately recognized
all of the remaining deferred revenue into revenue during the
quarter ending December 31, 2015. Also as a result of the
termination of the agreement, the Company is no longer eligible to
receive any further milestone payments from Merck KGaA, Darmstadt,
Germany.
- Research and development expenses were $3.0 million for the
fourth quarter ended December 31, 2016, compared to $11.4 million
for the same period in 2015. The $8.4 decrease in research and
development expenses, net of reimbursement for Merck KGaA,
Darmstadt, Germany’s 70 percent share of total eligible
collaboration expenses for evofosfamide, was due primarily to a
$4.6 million decrease in employee related expenses, including a
$1.0 million decrease in non-cash stock-based compensation expense
and a $3.8 million decrease in clinical development expenses and
consulting expenses. Research and development expenses were $16.6
million for the year ended December 31, 2016, compared to $40.3
million for the same period in 2015. The $23.7 million decrease in
research and development expenses, net of reimbursement for Merck
KGaA, Darmstadt, Germany’s 70 percent share of total eligible
collaboration expenses for evofosfamide, was due primarily to a
$14.1 million decrease in employee related expenses, including a
$2.8 million decrease in non-cash stock-based compensation expense,
a $8.3 million decrease in clinical development expenses and a $1.3
million decrease in consulting expenses.
- General and administrative expenses were $2.0 million for the
fourth quarter ended December 31, 2016 compared to $2.2 million for
the same period in 2015. The decrease in general and administrative
expenses was due primarily to a $0.2 million decrease in employee
related expenses. General and administrative expenses were $7.8
million for the year ended December 31, 2016 compared to $9.7
million for the same period in 2015. The $1.9 million decrease in
general and administrative expenses was due primarily to a $1.5
million decrease in employee related expenses and $0.4 million in
consulting expenses.
- Non-cash stock-based compensation expense included in total
operating expenses was $0.7 million and $3.1 million for the fourth
quarter and year ended December 31, 2016, respectively, compared to
$2.0 million and $6.8 million for the same periods in 2015,
respectively. The decrease in stock-based compensation expense was
due to the amortization of a smaller number of options with lower
fair values.
- Net loss for the fourth quarter ended December 31, 2016 was
$3.7 million compared to net income of $69.7 million for the same
period in 2015. Included in the net loss for the fourth quarter of
2016 was an operating loss of $5.0 million and non-cash income of
$1.2 million compared to an operating income of $52.3 million and
non-cash income of $17.4 million for the fourth quarter of 2015.
Net loss for the year ended December 31, 2016 was $24.1 million
compared to net income of $43.8 million for the same period in
2015. Included in the net loss for 2016 was an operating loss of
$24.3 million and non-cash income of $0.1 million compared to an
operating income of $26.9 million and non-cash income of $16.8
million for the year ended December 31, 2015. The non-cash income
is related to changes in the fair value of the Company’s
outstanding warrants that was classified as other income
(expense).
About EvofosfamideEvofosfamide (previously
known as TH-302) is an investigational hypoxia-activated prodrug of
a bis-alkylating agent that is preferentially 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.
About TH-3424 TH-3424 is small-molecule drug
candidate being evaluated for the potential treatment of
hepatocellular (liver) cancer (HCC), castrate resistant prostate
cancer (CRPC), T-cell acute lymphoblastic leukemias (T-ALL), and
other cancers expressing high levels of aldo-keto reductase family
1 member C3 (AKR1C3). Tumors overexpressing AKR1C3 can be resistant
to radiation therapy and chemotherapy. TH-3424 is a prodrug that
selectively releases a potent DNA cross-linking agent in the
presence of AKR1C3. Preliminary nonclinical toxicology studies
suggested an adequate therapeutic index that the Company believes
warrants conducting Investigational New Drug (IND)-enabling
toxicology studies, which are being done in collaboration with
Ascenta Pharmaceuticals, Ltd.
About Threshold Pharmaceuticals Threshold is a
clinical-stage biopharmaceutical company focused on the development
of drugs and diagnostic agents targeting the tumor microenvironment
of solid tumors and 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 the Company’s website.
Important Information for Investors and
Stockholders This communication may be deemed to be
solicitation material in respect of the proposed transaction
between Threshold Pharmaceuticals, Inc. (Threshold) and Molecular
Templates, Inc. (Molecular Templates) and Molecular Templates
stockholders. In connection with the proposed transaction between
Threshold and Molecular Templates and its stockholders, Threshold
will file with the Securities and Exchange Commission (SEC) a
registration statement containing a proxy statement of Threshold
that will also constitute a prospectus of Threshold. Threshold will
mail the proxy statement/prospectus to Threshold stockholders, and
the securities may not be sold or exchanged until the registration
statement becomes effective. THRESHOLD URGES INVESTORS
AND STOCKHOLDERS TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING
THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, AS WELL AS
OTHER DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. This communication is not a
substitute for the registration statement, definitive proxy
statement/prospectus or any other documents that Threshold may file
with the SEC or send to Threshold stockholders in connection with
the proposed transaction. Before making any voting decision,
investors and security holders are urged to read the registration
statement, proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC in connection
with the proposed transaction as they become available because they
will contain important information about the proposed transaction
and related matters.
You may obtain free copies of the proxy statement/prospectus and
all other documents filed or that will be filed with the SEC
regarding the proposed transaction at the website maintained by the
SEC www.sec.gov. Once they are filed, copies of the
registration statement and proxy statement/prospectus will be
available free of charge on Threshold's website
at www.thresholdpharm.com or by contacting Threshold's
Investor Relations at 510.703.9491 or by mail at Investor
Relations, Threshold Pharmaceuticals Inc., 170 Harbor Way, Suite
300, South San Francisco, California 94080.
Participants in Solicitation Threshold,
Molecular Templates and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the holders of Threshold common stock in connection
with the proposed transaction. Information about Threshold's
directors and executive officers is set forth in Threshold's
definitive proxy statement for its 2016 annual meeting, which was
filed with the SEC on April 29, 2016. Other information regarding
the interests of such individuals, as well as information regarding
Molecular Templates' directors and executive officers and other
persons who may be deemed participants in the proposed transaction,
will be set forth in the proxy statement/prospectus, which will be
included in Threshold's registration statement when it is filed
with the SEC. You may obtain free copies of these documents as
described in the preceding paragraph.
Non-Solicitation This communication shall not
constitute an offer to sell or the solicitation of an offer to sell
or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No public offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Forward-Looking Statements Except for
statements of historical fact, the statements in this press release
are forward-looking statements, including all statements regarding
the proposed merger with Molecular Templates, the therapeutic
potential of evofosfamide or TH-3424; Threshold's plans to focus
its resources on evofosfamide; anticipated development activities
related to evofosfamide, and the anticipated timing thereof;
Threshold's plans to continue to pursue discussions regarding
potential registration pathways for evofosfamide in Japan, and the
potential for evofosfamide to be approved for marketing in Japan;
and Threshold's estimates of the total and non-cash charges it
expects to incur in connection with the reduction in employees, and
the anticipated timing thereof. These statements constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act
and are usually identified by the use of words such as
"anticipates," "believes," "estimates," "expects," "intends,"
"may," "plans," "projects," "seeks," "should," "will," and
variations of such words or similar expressions. These
forward-looking statements reflect our current views about our
plans, intentions, expectations, strategies and prospects, which
are based on the information currently available to us and on
assumptions we have made. Although we believe that our plans,
intentions, expectations, strategies and prospects as reflected in
or suggested by those forward-looking statements are reasonable, we
can give no assurance that the plans, intentions, expectations or
strategies will be attained or achieved. Furthermore, actual
results may differ materially from those described in the
forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control.
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 difficulty and uncertainty of
pharmaceutical product development, including the inability to
complete the proposed merger and other contemplated transactions in
connection with the merger; liquidity and trading market for shares
prior to and following the consummation of the proposed merger and
proposed financing; costs and potential litigation associated with
the proposed merger; failure or delay in obtaining required
approvals by the SEC or any other governmental or
quasi-governmental entity necessary to consummate the proposed
merger, including our ability to file and have declared effective
by the SEC a registration statement and proxy statement/prospectus
in connection with the proposed merger and other contemplated
transactions in connection with the merger, which may also result
in unexpected additional transaction expenses and operating cash
expenditures on the parties; a failure to satisfy the conditions to
the closing of the proposed investment by Longitude Capital, which
would require the Company to raise additional funds sooner than
expected to pursue its development goals; an inability or delay in
obtaining required regulatory approvals for product candidates,
which may result in unexpected cost expenditures; the price of the
proposed financing transaction in connection with the proposed
merger and contemplated transactions in connection with the merger
being materially lower than the trading price of Threshold's common
stock at the time of such financing; failure to obtain the
necessary stockholder approvals or to satisfy other conditions to
the closing of the proposed merger and the other contemplated
transactions; a superior proposal being submitted to either party;
uncertainties of cash flows and inability to meet working capital
needs; cost reductions that may not result in anticipated level of
cost savings or cost reductions prior to or after the consummation
of the proposed merger; and risks associated with the possible
failure to realize certain benefits of the proposed merger,
including future financial, tax, accounting treatment, and
operating results. Many of these factors that will determine actual
results are beyond Threshold's, Molecular Templates', or the
Company's ability to control or predict the risks that the design
of, or data collected from, the planned Phase I clinical trial of
evofosfamide with immune checkpoint inhibitors may be inadequate to
demonstrate safety or sufficient efficacy, or otherwise may be
insufficient to support any further development of evofosfamide,
and that Threshold's toxicology studies of TH-3424 may not
demonstrate sufficient safety to support an investigational new
drug application and to further the development of TH-3424 into the
clinic; the uncertain and time-consuming regulatory approval
process, including the risk that data from the completed MAESTRO
clinical trial will not be sufficient to support the approval of
evofosfamide for the treatment of patients with pancreatic cancer
in Japan; Threshold's need for and the availability of resources to
develop evofosfamide and TH-3424 and to support Threshold's
operations, including the risks that Threshold's
currently-available resources may be insufficient to further
current development plans for evofosfamide and TH-3424 and that
Threshold will otherwise need to raise substantial additional
capital in order to advance the clinical development of
evofosfamide and TH-3424; the risks that Threshold could determine
to abandon the development of evofosfamide and TH-3424 as a result
of inadequate resources, negative or inconclusive clinical trial or
toxicology study results, the failure to obtain regulatory approval
of evofosfamide in Japan, or otherwise; and risks related to
Threshold's ability to implement the reduction in employees as
currently anticipated, the impact of such reduction on Threshold's
business and unanticipated charges not currently contemplated that
may occur as a result of such reduction. Further information
regarding these and other risks 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 27, 2017
and is available from the SEC's website (www.sec.gov) and on our
website (www.thresholdpharm.com) under the heading "Investors," and
in other filings that Threshold will make with the SEC in
connection with the proposed transactions, including the
registration statement and the proxy statement/prospectus described
above under "Important Information and Where to Find It." Existing
and prospective investors are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the
date hereof. The statements made in this press release speak only
as of the date stated herein, and subsequent events and
developments may cause our expectations and beliefs to change.
Unless otherwise required by applicable securities laws, we do not
intend, nor do we undertake any obligation, to update or revise any
forward-looking statements contained in this news release to
reflect subsequent information, events, results or circumstances or
otherwise.
THRESHOLD PHARMACEUTICALS, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
- |
|
|
$ |
65,874 |
|
$ |
- |
|
|
$ |
76,915 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
Research and
development |
|
|
3,012 |
|
|
|
11,369 |
|
|
16,554 |
|
|
|
40,271 |
General and
administrative |
|
|
1,951 |
|
|
|
2,248 |
|
|
7,808 |
|
|
|
9,716 |
Total Operating
Expenses |
|
|
4,963 |
|
|
|
13,617 |
|
|
24,362 |
|
|
|
49,987 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(4,963 |
) |
|
|
52,257 |
|
|
(24,362 |
) |
|
|
26,928 |
|
|
|
|
|
|
|
|
|
Interest income
(expense), net |
|
|
36 |
|
|
|
26 |
|
|
147 |
|
|
|
125 |
Other income
(expense) (1) |
|
|
1,245 |
|
|
|
17,430 |
|
|
121 |
|
|
|
16,769 |
Net income (loss) |
|
$ |
(3,682 |
) |
|
$ |
69,713 |
|
$ |
(24,094 |
) |
|
$ |
43,822 |
|
|
|
Net income
(loss) per common share |
|
|
Basic |
|
$ |
(0.05 |
) |
|
$ |
0.98 |
|
$ |
(0.34 |
) |
|
$ |
0.62 |
Diluted |
|
$ |
(0.05 |
) |
|
$ |
0.86 |
|
$ |
(0.34 |
) |
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
Weighted-average shares used in per common |
|
|
|
|
|
|
|
|
share calculation: |
|
|
|
|
|
|
|
|
Basic |
|
|
71,560 |
|
|
|
71,457 |
|
|
71,524 |
|
|
|
70,242 |
Diluted |
|
|
71,560 |
|
|
|
73,686 |
|
|
71,524 |
|
|
|
73,483 |
|
|
|
|
|
|
|
|
(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) |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
|
(unaudited) |
|
(1) |
Assets |
|
|
|
|
|
|
|
|
Cash, cash equivalents and |
|
|
|
marketable securities |
$ |
23,551 |
|
$ |
48,680 |
|
Collaboration Receivable |
|
- |
|
|
1,891 |
|
Prepaid expenses and other current assets |
|
623 |
|
|
2,599 |
|
Property and equipment, net |
|
109 |
|
|
333 |
|
Other assets |
|
- |
|
|
166 |
|
Total assets |
$ |
24,283 |
|
$ |
53,669 |
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Total current liabilities |
$ |
2,616 |
|
$ |
10,828 |
|
Long-term liabilities (2) |
|
1,779 |
|
|
1,995 |
|
Stockholders' equity (deficit) |
|
19,888 |
|
|
40,846 |
|
Total liabilities and stockholders' equity (deficit) |
$ |
24,283 |
|
$ |
53,669 |
|
|
|
|
|
|
(1) Derived from audited financial statements |
(2) Includes as of December 31, 2016 and December 31,
2015, $1.7 million and $1.9 million of warrant liability,
respectively. |
|
Contact:
Denise Powell
denise@redhousecomms.com
510.703.9491
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