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Threshold Pharmaceuticals Reports Second Quarter Financial Results

MENLO PARK, Calif., July 31, 2017 (GLOBE NEWSWIRE) -- 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 Update
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:

  • 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 Update
On 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 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.

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

Source:Threshold Pharmaceuticals, Inc.