Threshold Pharmaceuticals Reports Second Quarter Financial Results
July 31 2017 - 5:45PM
Threshold Pharmaceuticals, Inc. (Nasdaq:THLD) today reported
financial results for the second quarter ended June 30, 2017 and
provided an update on the Company's corporate and clinical
development activities.
Evofosfamide UpdateThreshold’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:
- Initiated a Phase 1 clinical trial evaluating evofosfamide in
combination with the immune checkpoint antibody, ipilumumab, at the
University of Texas MD Anderson Cancer Center to potentially
improve the efficacy of immune checkpoint antibody as an
anti-cancer therapy.
TH-3424 UpdateOn May 31, 2017, Threshold, and
OBI Pharma Inc. (“OBI”), entered into an Asset Transfer Agreement
pursuant to which the Company agreed to sell to OBI certain rights
to TH-3424. The assets purchased by OBI pursuant to the Asset
Transfer Agreement included certain specified intellectual
property, as well as assumed contracts and documentation, in each
case, related to TH-3424. In connection with the sale of TH-3424,
OBI also assumed certain liabilities and obligations of the Company
arising out of or related to certain of the assumed contracts. In
addition, the Company granted to OBI a non-exclusive,
nontransferable, fully paid-up license of certain of its
intellectual property rights for use by OBI in the development of
TH-3424. OBI paid the Company $3.0 million and the
transaction closed on June 16, 2017.
Update Regarding 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. In addition, subject to the closing of the
merger, the combined company expects to close on approximately $40
million of equity financing pursuant to equity commitment letters
previously reported, including from Longitude Capital, a U.S. based
venture capital firm, which will invest $20 million at the close of
the transaction, subject to certain conditions. Shortly following
the closing of this equity financing, the combined company also
expects to close on an additional $20 million of equity financing
from an investment from Millenium Pharmaceuticals, Inc., a wholly
owned subsidiary of Takeda Pharmaceuticals:
- Each of these transactions was approved by the board of
directors of both companies. Threshold’s annual meeting of
stockholders, at which the stockholder approvals necessary to close
the merger and the equity financings, is scheduled for 9:00 a.m. PT
today, July 31, 2017. If approvals are obtained, and subject to
other customary closing conditions, the Company expects all of
these transactions to close this week.
- In connection with, and as a condition of closing the Merger,
and subject to the approval of the stockholders of the Company at
the meeting to be held today, the Company’s Board of Directors
intends to effect a reverse stock split within a range of every 5
to 15 shares (or any number in between) of outstanding Threshold
common stock being combined and reclassified into one share of
common stock.
- Assuming receipt of the necessary stockholder approvals, the
specific ratio of the reverse stock split and the results of the
annual meeting will be announced by a separate press release this
week.
Second Quarter 2017 Financial Results
- Cash, cash equivalents and marketable securities totaled $16.8
million at June 30, 2017 compared to $17.6 million at March 31,
2017. The net decrease of $0.9 million was a result of $1.8 million
for operating cash requirements for the quarter ended June 30,
2017, and a $2.0 million bridge loan to Molecular Templates in the
form of a promissory note, partially offset by a $3.0 million
payment received from OBI for sale of TH-3424.
- Revenue for the second quarter ended June 30, 2017, was
$3.0 million, compared to no revenue for the same period in 2016.
Revenue for the second quarter ended June 30, 2017 related to the
receipt of non-refundable payments in aggregate of $3.0 million
from OBI for the sale of TH-3424. The Company immediately
recognized the $3.0 million as revenue since there were no further
obligations under the Asset Transfer Agreement upon the completion
of the transfer of Threshold’s rights and obligations to OBI, which
occurred on June 16, 2017.
- Research and development expenses were $1.1 million for the
second quarter ended June 30, 2017, compared to $4.0 million for
the same period in 2016. The $2.9 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
$2.1 million decrease in clinical development and consulting
expenses, and a $0.8 million decrease in employee related expenses,
including a $0.2 million decrease in non-cash stock-based
compensation expense.
- General and administrative expenses were $1.7 million for the
second quarter ended June 30, 2017 compared to $1.9 million for the
same period in 2016. The $0.2 million decrease in general and
administrative expenses was due to a $0.5 million decrease in
employee related expenses (including a $0.2 million decrease in
noncash stock-based compensation expense), partially offset by a
$0.3 million increase in consulting expenses for merger-related
activities.
- Non-cash stock-based compensation expense included in total
operating expenses was $0.4 million for the second quarter ended
June 30, 2017 compared to $0.8 million for the same period in 2016.
The decrease in stock-based compensation expense was due to the
amortization of a smaller number of options with lower fair
values.
- Net income for the second quarter ended June 30, 2017 was $1.1
million compared to a net loss of $6.9 million for the same period
in 2016. Included in the net income for the second quarter of 2017
was operating income of $0.2 million and non-cash income of $0.9
million compared to operating loss of $5.9 million and non-cash
expense of $1.0 million for the second quarter of 2016.
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 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.
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 and the timing of its
closing and the closing of the related equity financings, 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. 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: difficulties and uncertainties
associated with the proposed merger, 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; a failure to satisfy the conditions to the
closing of the proposed investments by Longitude Capital or Takeda,
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; 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. 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 July 31, 2017 and is
available from the SEC's website (www.sec.gov) and on our website
(www.thresholdpharm.com) under the heading "Investors". 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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
3,000 |
|
$ |
- |
|
|
$ |
3,000 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Research and
development |
|
1,115 |
|
|
4,016 |
|
|
|
2,705 |
|
|
|
10,021 |
|
General and
administrative |
|
1,687 |
|
|
1,892 |
|
|
|
4,540 |
|
|
|
4,141 |
|
Total Operating expenses |
|
2,802 |
|
|
5,908 |
|
|
|
7,245 |
|
|
|
14,162 |
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
198 |
|
|
(5,908 |
) |
|
|
(4,245 |
) |
|
|
(14,162 |
) |
|
|
|
|
|
|
|
|
Interest income
(expense), net |
|
34 |
|
|
40 |
|
|
|
67 |
|
|
|
72 |
|
Other income (expense)
(1) |
|
913 |
|
|
(996 |
) |
|
|
249 |
|
|
|
(626 |
) |
Net income (loss) |
$ |
1,145 |
|
$ |
(6,864 |
) |
|
$ |
(3,929 |
) |
|
$ |
(14,716 |
) |
|
|
Net income
(loss) per common share |
|
Basic |
$ |
0.02 |
|
$ |
(0.10 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.21 |
) |
Diluted |
$ |
0.02 |
|
$ |
(0.10 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
Weighted-average shares used in per common |
|
|
|
|
|
|
|
share calculation: |
|
|
|
|
|
|
|
Basic |
|
71,592 |
|
|
71,511 |
|
|
|
71,584 |
|
|
|
71,500 |
|
Diluted |
|
71,621 |
|
|
71,511 |
|
|
|
71,584 |
|
|
|
71,500 |
|
|
|
|
|
|
|
|
(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, |
|
|
2017 |
|
|
2016 |
|
|
|
(unaudited) |
|
|
(1) |
|
Assets |
|
|
|
|
|
|
|
|
Cash, cash equivalents and |
|
|
|
marketable securities |
$ |
16,768 |
|
$ |
23,551 |
|
Notes receivable |
|
4,000 |
|
|
- |
|
Prepaid expenses and other current assets |
|
93 |
|
|
623 |
|
Property and equipment, net |
|
- |
|
|
109 |
|
Total assets |
$ |
20,861 |
|
$ |
24,283 |
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Total current liabilities |
$ |
2,480 |
|
$ |
2,616 |
|
Long-term liabilities (2) |
|
1,494 |
|
|
1,779 |
|
Stockholders' equity |
|
16,887 |
|
|
19,888 |
|
Total liabilities and stockholders' equity |
$ |
20,861 |
|
$ |
24,283 |
|
|
|
|
|
|
|
|
|
|
|
(1) Derived from audited financial statements |
(2) Includes as of June 30, 2017 and December 31 2016,
$1.5 million and $1.7 million of warrant liability,
respectively. |
Contact:
Denise Powell
denise@redhousecomms.com
510.703.9491
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