On May 15, 2017 Threshold Pharmaceuticals, Inc. (Nasdaq:THLD) reported financial results for the first quarter ended March 31, 2017, and provided an update on the Company’s corporate and clinical development activities (Filing, Q1, Threshold Pharmaceuticals, 2017, MAY 15, 2017, View Source [SID1234519164]).

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"With our recently announced proposed merger between Threshold and Molecular Templates and execution of our clinical trial agreement with the MD Anderson Cancer Center, we are well positioned to advance our lead product candidate, evofosfamide, into the Phase 1 clinical trial at the MD Anderson Cancer Center in the second quarter 2017," said Barry Selick, Ph.D., Threshold’s Chairman of the Board.

Recent Highlights

Definitive Merger Agreement
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 after the close of the transaction, subject to certain conditions, including the receipt of additional equity financing commitments of an additional $20 million. The transaction has been approved by the board of directors of both companies and 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. Highlights of the merger include:

· 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 will 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
Threshold’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:

• The Company is on track to commence its Phase 1 clinical trial evaluating evofosfamide in combination with the immune checkpoint antibody, ipilumumab, by mid-2017 at the MD Anderson Cancer Center in Houston to potentially improve the efficacy of immune checkpoint antibody as an anti-cancer therapy.


Threshold Pharmaceuticals

First Quarter 2017 Financial Results
· Cash, cash equivalents and marketable securities totaled $17.6 million at March 31, 2017 compared to $23.6 million at December 31, 2016. The net decrease of $6.0 million was a result of $4.0 million for operating cash requirements for the quarter ended March 31, 2017 and a $2.0 million bridge loan to Molecular Templates, Inc. in the form of a promissory note.

· Research and development expenses were $1.6 million for the first quarter ended March 31, 2017, compared to $6.0 million for the same period in 2016. The $4.4 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 $0.9 million decrease in employee related expenses, including a $0.2 million decrease in non-cash stock-based compensation expense and a $3.5 million decrease in clinical development expenses and consulting expenses.

· General and administrative expenses were $2.9 million for the first quarter ended March 31, 2017 compared to $2.2 million for the same period in 2016. The $0.7 increase in general and administrative expenses was due to a $0.9 million increase in consulting expenses partially offset by a $0.2 million decrease in employee related expenses.

· Non-cash stock-based compensation expense included in total operating expenses was $0.5 million for the first quarter ended March 31, 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 loss for the first quarter ended March 31, 2017 was $5.1 million compared to $7.9 million for the same period in 2016. Included in the net loss for the first quarter of 2017 was an operating loss of $4.4 million and non-cash expense of $0.7 million compared to an operating loss of $8.3 million and non-cash income of $0.4 million for the first quarter of 2016.

About Evofosfamide
Evofosfamide (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.