Investing In Cancer Research Is Worth The Risk: Echo He

by: Life Sciences Report

If investigators could find a way to make breast cancer survivors truly cancer free, and if a diagnosis of pancreatic cancer were less dire, investors could reap windfalls while patients and their families rejoice. In this interview with The Life Sciences Report, Maxim Group Senior Equity Analyst Echo He brings two important names to the table and explains why she believes the potential upside is worth the risk.

The Life Sciences Report: Dr. He, you are a senior equity analyst covering biotech in the U.S. and China. Which companies in the space are you excited about?

Echo He: Threshold Pharmaceuticals (NASDAQ:THLD) is trading at just over $5, and I have it Buy-rated with a $10 price target. The company has a $317M market valuation. Investor interest in Threshold arises from pancreatic cancer, a very difficult-to-treat disease-probably one of the most vicious cancers. At the time of diagnosis, 80% of patients are already at an advanced stage. Pancreatic cancer is very hard to detect. The location of the cancer is in a cavity behind the abdominal organs, so there is usually no early diagnosis with imaging or other screening. Although some drugs work on this cancer, there have been failures just in the past year. Threshold Pharmaceuticals faces an uphill battle in this difficult indication.

The company was able to show a statistically significant progression-free survival benefit in a phase 2 trial with TH-302 [a hypoxia-activated chemo prodrug]. But the trial did not show an overall survival benefit, and that dented investors' confidence in the company and its drug. Threshold's phase 3 trial has a much cleaner design than the phase 2 study. Also, Threshold has partnered with German company Merck KGaA (OTCPK:MKGAY), and just the fact that Merck decided to go with a phase 3 gives some support to the theory Threshold has a good shot at pancreatic cancer with TH-302.

Interim data is set for release in late 2014. For end results, the time frame is sometime in 2015. That's a long wait, and because of that the stock is not generating any excitement. It gets overlooked by a lot of investors.

TLSR: You said the drug did not show a statistically significant increase in overall survival in phase 2. What do you make of this?

EH: Actually, after the company reported that phase 2 did not meet the overall survival endpoint, I consulted with some practicing oncologists. When progression-free survival was achieved, patients in the control arm were allowed to cross over to the TH-302-treated group-the experimental arm-to receive whatever treatment the oncologist prescribed. That mixed up the design, complicating the analysis of overall survival rates; in fact, the crossover could have caused the statistical insignificance of overall survival.

Also, among those doctors I spoke with, quite a few stated that pancreatic cancer has particular varieties of cancer physiology, some of which may lead to long survival for some patients regardless of treatment. These outliers would distort the statistical results. Enlarging the sample size from around 200 in phase 2 to more than 600 in phase 3 could solve the outlier distortion issue.

TLSR: Phase 3 overall survival data in pancreatic cancer patients being treated with TH-302 are expected in mid-2015 or 2016. If in the meantime, if the Data and Safety Monitoring Board [DSMB] interim analyses say that the trial should continue, should we read something positive into that?

EH: The priority of the DSMB is to monitor the safety. If it says go ahead and continue, that does not mean that Threshold will eventually get positive results. The go-ahead only means there is no safety issue and the efficacy looks OK up to that point in time.

TLSR: What about potential competitors to TH-302 in pancreatic cancer?

EH: Although Celgene Corp.'s (NASDAQ:CELG) Abraxane [paclitaxel] has been approved for treatment of pancreatic cancer as of last October, TH-302 may still have a chance in the first-line treatment market if it is ultimately approved, depending on the overall safety and efficacy of the two drugs.

Other competitors have recently failed. We have several examples. Clovis Oncology (NASDAQ:CLVS) announced back in November that its CO-101 had failed. Amgen Inc. (NASDAQ:AMGN) failed a trial with AMG 479 [ganitumab] late last summer. Both were in combination with gemcitabine. Infinity Pharmaceuticals Inc. (NASDAQ:INFI) had a drug, IPI-926 [saridegib], also in combination with gemcitabine, which failed in the same setting.

These failures give TH-302 more chance to succeed in the market once it has achieved positive results. Also, with all these failures, some in earlier trial phases, I would say it is already encouraging that TH-302 was able to carry over to phase 3 trials.

TLSR: Echo, thank you.

EH: Sure. Thank you.

This interview was conducted by George S. Mack of The Life Sciences Report.

Prior to joining Maxim Group, Echo He was a director at Oppenheimer & Co. Inc., where she conducted equity analysis of small- to mid-cap U.S.-listed Chinese stocks. Previous to Oppenheimer & Co., Dr. He served as a vice president at CRT Capital Group LLC, where she conducted equity and credit analysis of Chinese small-cap, U.S.-based life science and distressed companies. Dr. He also served as a research scientist at the National Institutes of Health [NIH], where she conducted a part of the Human Genome Project aimed at interpreting diseases and their risks by genetic patterns. Dr. He received a medical doctorate from Beijing University, a doctorate in medical sciences from the University of Toledo and a master's of business administration in finance and economics from the University of Chicago.


1) George S. Mack conducted this interview for The Life Sciences Report and provides services to The Life Sciences Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Life Sciences Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Echo He: I or my family own shares of the following companies mentioned in this interview: None. I personally or my family am paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Maxim Group expects to receive or intends to seek compensation for investment banking services from Threshold Pharmaceuticals Inc. in the next 3 months. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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