Seeking Alpha
Recommended for you:
-
dasdasdasdadas
Special situations, deep value, growth, momentum
Profile| Send Message|
( followers)  

Without question, Threshold Pharmaceuticals, Inc. (NASDAQ:THLD) is on the cusp of becoming a blockbuster stock for those of you following the new developments, their pipeline, orphan drug status, EU approval, and discovery into Hypoxia and how it relates to cancer.

Threshold first hit the radar at $3, then at $5, and has traded recently as high as $9.00 on Orphan Drug status and continued success. They are a development stage company and have a very good pipeline looking down the road. For a small company, it's about as good as you may ever see. Now, let's take a serious look at Threshold Pharmaceuticals.

Threshold has a "new class of drug" called TH-302 and is an anti-cancer agent in clinical development. Pre-clinically, it is activated under hypoxic conditions and has demonstrated potent anticancer activity in many preclinical cancer models. TH-302 is converted selectively to the drug's active form, dibromo isophoramide mustard, a potent DNA alkylator, within hypoxic tumor cells. TH-302 targets levels of hypoxia that are common in tumors but are rare in normal tissues - this is how selective targeting of the tumor occurs.

After conversion to the active form of the drug, the more resistant hypoxic cells are exposed to high concentrations of released cytotoxic agent, which can also diffuse into the surrounding oxygenated regions of the tumor, exerting what is referred to as a bystander effect. In this way, TH-302 can kill more of the tumor than can otherwise be accounted for by the hypoxic fraction alone. Because of its selective activation in the hypoxic regions of solid tumors, we believe that TH-302 will be less likely to produce the systemic toxicity caused by most cytotoxic chemotherapies.

Now, if you've followed us before on Vivus (NASDAQ:VVUS), Affymax (OTCQB:AFFY), Inhibitex (NASDAQ:INHX), Incyte (NASDAQ:INCY) and other stocks, you already know that an investment in biotech stocks is like taking a gamble (to some extent) until a drug is proven by the FDA. We try to minimize our risk by digging deep into the facts and try to make an educated decision on whether or not to take a position in such a risky endeavor based on the facts that we uncover.

Keep in mind that like Vivus (pending obesity drug: Qnexa) or other stocks that may have hit some turbulence along the way, the important thing to remember here is where we see these types of stocks heading in the next few quarters or year in the approval process and then worldwide sales. Today, these developing biotech stocks are very cheap, but upon evidence of successful trials and later approval, they could become multi-baggers in the next several months or years. Going back, Threshold was a $96 stock in 2006 and below $1.50 in February of 2012!

As you evaluate the risks in biotech stocks, especially developmental stage biotech investments like this idea, you will need to factor in the following:

  • The probability of the drug getting FDA and EU approval? A central tradeoff facing the FDA involves balancing two goals: fulfilling its mission set by Congress to assure the "safety" and "efficacy" of drugs, while at the same time advancing the public health by not slowing down or disabling the innovative process by which new medical products reach the market.
  • Will it pass on "Safety" and "Efficacy?"
  • If proven safe and effective, what is the target value placed in the market for the drug in the US and then worldwide with EU approval? Could the company have a multibillion-dollar per year blockbuster drug?
  • Then, if approved what is the process for getting the drug to market? This is very costly too and takes a lot of preparation and expense. Partnerships are often developed from Big pharma.

So, while all of this is going on in the background you might experience severe swings up and down in the price of the shares of stock like you may have ever seen before. Short term volatility should be part of the equation in doing business here, so please be prepared as you will certainly earn your return if a stock like this one does what we think it will do in the long run.

We are very impressed with CEO Dr. Barry Selick and his team who has addressed TH-302 and here are some details. Let's address some details:

Global Resources

Threshold Pharmaceuticals and Merck KGaA Announce Global Agreement to Co-Develop and Commercialize Phase 3 Hypoxia-Targeted Drug TH-302.

Market For the Drugs

Threshold is entering a multi-billion dollar market for multiple known diseases targeted with their pipeline. See the pipeline info below.

Clinical Pipeline
Investigational Product Development Programs. Click Link

Safety and Efficacy

TH-302 tested now in over 500 patients, has been shown to be safe in every study. As presented at a recent conference earlier this year, the side effects are minor treatable skin and mucosal toxicity, resulting in a rash and in some cases, blistering. Also, take note that data suggests that TH-302 is safer than any standard of care treatments currently available today.

Threshold announces results from positive Phase 2b trial of TH-302.

Orphan Drug Status
Threshold Receives Orphan Drug Status in the EU for Soft Tissue Sarcoma

Milestone Payments on Real Results
Threshold receives $20 million milestone payment from Merck

Financial Status
Threshold now has about $86 million in the bank and zero debt! As trials progress we expect more milestone payments from Merck.

Breaking News

  • Unlike ever before, something else is developing in our favor: The US may speed the approval of breakthrough drugs.
  • University of Georgia professor Ying Xu and his colleagues released some recent key research suggesting that Hypoxia might very well be the key to treating multiple types of cancers. See the Journal of Molecular Cell Biology Advance Access published April 20, 2012.

We give Dr. Ying Xu and his team great praise in tackling the issue of oxygen and it's role in defeating cancer. Without question, Dr. Xu's current research confronts traditional Western medicine's belief that low oxygen levels in cells, not genetic mutations, may fuel uncontrollable cancer growth. His findings support those described almost 80 years ago by Dr. Otto Warburg, who not only was awarded the Nobel Prize in 1931, but was nominated three additional times.

Dr. Warburg's discovery has opened up new avenues in the field of cellular metabolism and cellular respiration. He has shown, among other things, that cancerous cells can live and develop, even in the absence of oxygen. In summary, his achievements highlighted the fact that cancer cells proliferate in a "Hypoxic" state. When that state changes to a non-hypoxic state, the cancer cells die! Oxygen therapies, as embraced by non-traditional practitioners, does indeed have merit as Dr. Xu has discovered. With great certainty in Hypoxia research from Warburg and Xu, the medical community is taking notice.

OK, what's next? More data is expected out soon and the American Society of Clinical Oncology - ASCO is pending as well. Top line results are expected by year end 2012. We are very bullish and stand behind the management of this company and see tremendous upside into 2012 - 2013. I strongly believe as we did on Vivus from $10 to $25, Inhibitex (acquired by BMY in Jan 2012) from $11 to $26 and a few others that our group follows, that TH-302 will continue to be proven to be safe and effective. THLD is financially strong and has the necessary relationships and resources to get TH- 302 to market worldwide on continued success.

Threshold short interest is: 5,945,300 shares and 3.6 days to cover. We like THLD right here at the low $6.00 level and look for more upside soon through 2012 on continued TH-302 success.

Lastly, as you may know, investing in biotech stocks are very risky and there is a trade-off between risk and reward, so please treat this idea as such. We ask that you please review the enclosed details with your financial advisor if interested in any stocks researched by this author.

Disclosure: I am long THLD.

Source: Threshold Pharmaceutical's TH-302 Could Be A Blockbuster By Targeting Hypoxia In Cancer