As we previously suggested, Threshold Pharmaceuticals (THLD) had some question marks about their future prospects of TH-302 in two key indications: pancreatic cancer and soft-tissue sarcoma. Recent data readouts have brought these issues into focus again. Although, Threshold has a good cash position, we feel their lead (and only) drug, TH-302, will have a tough road ahead of it. We continue to believe that negative sentiment on TH-302 and positive data from competitors will keep institutional investors on the sidelines.
Tough decision for Phase III in pancreatic cancer
In our first article, we outlined that TH-302's future in pancreatic cancer would likely be dependent upon outcomes from competitor near-term data readouts. After-hours on Friday, Celgene (CELG) announced that its phase III study of ABRAXANE in combination with gemcitabine in treatment-naïve patients with advanced pancreatic cancer met its primary endpoint of overall survival. Celgene plans to present the results at the American Society of Clinical Oncology's (OTC:ASCO) 2013 Gastrointestinal Cancers Symposium being held in San Francisco on January 24-26, 2013. Bernstein Research noted that, "The company suggested to us that the result was highly statistically significant, and incontrovertibly superior to prior trials, drugs and the control arm of standard gemcitabine chemotherapy."
We believe this data will be of great interest to Merck KGaA, since it likely ups the bar required for achieving clinically meaningful data in a future Phase III study of TH-302 plus gemcitabine. With the Celgene data slated to be unveiled in late-January, we highly doubt Merck KGaA will actually launch the Phase III trial by end of year, despite Threshold's comments. With the real possibility that the Abraxane/Gemcitabine data wows at ASCO-GI, this will present a real problem to initiating a Phase III study of a mediocre drug. Threshold/Merck KGaA would likely have trouble enrolling patients and convincing key clinical investigators to be a part of the study. Additionally, we suspect the recent failure of Clovis Oncology (CLVS) lead drug will also weigh on them. These are all issues Merck KGaA will have to consider before launching the trial.
Ziopharm's Phase III data readout possibly delayed?
As we know, Threshold is conducting a pivotal Phase III trial in chemotherapy naive patients with metastatic or locally advanced unresectable soft tissue sarcoma. The trial will compare the efficacy and safety of TH-302 in combination with doxorubicin versus doxorubicin alone. Threshold plans to provide an update in the first half of 2013 on the interim progression free survival futility analysis from this trial after it reaches 50% enrollment. The study is not expected to complete enrollment until the end of 2013.
Meanwhile a competitor, ZIOPHARM Oncology (ZIOP), is expecting top line Phase 3 data by the end of the year. Ziopharm's lead drug, palifosfamide, is quite similar to Threshold's, however, it appears to have less hematological toxicity. In Ziopharm's recent third quarter update, they reiterated that PICASSO III data was "expected in the fourth quarter of 2012, subject to an update on study progress at the next meeting of the study's Independent Data Monitoring Committee, which is scheduled for mid-November 2012." We believe that Ziopharm's trial will read out positively for the company and could put pressure on Threshold's shares.
As of September 30, 2012, Threshold had $65.8 million in cash, cash equivalents and marketable securities. Threshold expects to get another $22.5 million in earned milestone payments during the fourth quarter of 2012 with the possibility of an additional $42.5 million in potential milestone payments in the future. Current cash should take them through 2013 and well into 2014.
With the landscape rapidly changing and Threshold becoming further behind, we still continue to see considerable risk in their stock. The Abraxane/Gemcitabine combination data could cause Merck KGaA to reconsider their Phase III plans and positive data out of Ziopharm's program presents another risk. Currently, we do not believe a position in Threshold is warranted at this time given current and future events.