- Definitive merger agreement between Threshold
and Molecular Templates expected to close mid-2017 -
Threshold Pharmaceuticals, Inc. (Nasdaq:THLD) today reported
financial results for the first quarter ended March 31, 2017, and
provided an update on the Company's corporate and clinical
development activities.
“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.
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 EvofosfamideEvofosfamide (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.
Important Information for Investors and
StockholdersThis communication may be deemed to be
solicitation material in respect of the proposed transaction
between Threshold Pharmaceuticals, Inc. (Threshold) and Molecular
Templates, Inc. (Molecular Templates) and Molecular Templates
stockholders. In connection with the proposed transaction between
Threshold and Molecular Templates and its stockholders, Threshold
will file with the Securities and Exchange Commission (SEC) a
registration statement containing a proxy statement of Threshold
that will also constitute a prospectus of Threshold. Threshold will
mail the proxy statement/prospectus to Threshold stockholders, and
the securities may not be sold or exchanged until the registration
statement becomes effective. THRESHOLD URGES INVESTORS
AND STOCKHOLDERS TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING
THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, AS WELL AS
OTHER DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. This communication is not a
substitute for the registration statement, proxy
statement/prospectus or any other documents that Threshold may file
with the SEC or send to Threshold stockholders in connection with
the proposed transaction. Before making any voting decision,
investors and security holders are urged to read the registration
statement, proxy statement/prospectus and all other relevant
documents filed or that will be filed with the SEC in connection
with the proposed transaction as they become available because they
will contain important information about the proposed transaction
and related matters.
You may obtain free copies of the proxy statement/prospectus and
all other documents filed or that will be filed with the SEC
regarding the proposed transaction at the website maintained by the
SEC, www.sec.gov. Once they are filed, copies of the
registration statement and proxy statement/prospectus will be
available free of charge on Threshold's website
at www.thresholdpharm.com or by contacting Threshold's
Investor Relations at 510.703.9491 or by mail at Investor
Relations, Threshold Pharmaceuticals Inc., 3705 Haven Ave., Suite
120, Menlo Park, California 94025.
Participants in Solicitation Threshold,
Molecular Templates and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the holders of Threshold common stock in connection
with the proposed transaction. Information about Threshold's
directors and executive officers is set forth in Threshold's annual
report on Form 10-K/A, which was filed with the SEC on April 28,
2017. Other information regarding the interests of such
individuals, as well as information regarding Molecular Templates'
directors and executive officers and other persons who may be
deemed participants in the proposed transaction, will be set forth
in the proxy statement/prospectus, which will be included in
Threshold's registration statement when it is filed with the SEC.
You may obtain free copies of these documents as described in the
preceding paragraph.
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, the related financing
with Longitude Capital, 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. 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; failure or delay in obtaining required
approvals by the SEC or any other governmental or
quasi-governmental entity necessary to consummate the proposed
merger, including our ability to file and have declared effective
by the SEC a registration statement and proxy statement/prospectus
in connection with the proposed merger and other contemplated
transactions in connection with the merger, which may also result
in unexpected additional transaction expenses and operating cash
expenditures on the parties; a failure to satisfy the conditions to
the closing of the proposed investment by Longitude Capital, 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; the price of the
proposed financing transaction in connection with the proposed
merger and contemplated transactions in connection with the merger
being materially lower than the trading price of Threshold's common
stock at the time of such financing; failure to obtain the
necessary stockholder approvals or to satisfy other conditions to
the closing of the proposed merger and the other contemplated
transactions; a superior proposal being submitted to either party;
uncertainties of cash flows and inability to meet working capital
needs; cost reductions that may not result in anticipated level of
cost savings or cost reductions prior to or after the consummation
of the proposed merger; and risks associated with the possible
failure to realize certain benefits of the proposed merger,
including future financial, tax, accounting treatment, and
operating results; risks related to our need for substantial
additional funding to complete the development and
commercialization of our product candidates, risks related to our
ability to raise the capital that we believe to be accessible and
is required to fully finance the development and commercialization
of our product candidates, risks relating to our ability to develop
our drug candidates for potential commercialization, the timing of
the commencement of planned Phase I clinical trial of evofosfamide
with immune checkpoint inhibitors, that the design of, or data
collected from, the trial may be inadequate to demonstrate safety
or sufficient efficacy, or otherwise may be insufficient to support
any further development of evofosfamide, risks that data to
date and trends may not be predictive of future results, risks
related to the conduct of our clinical trials, and risks that our
clinical trials may not receive regulatory approval. Many of these
factors that will determine actual results are beyond Threshold's,
Molecular Templates', or the Company's ability to control or
predict, including the risks that Threshold's currently-available
resources may be insufficient to further current development plans
for evofosfamide; the risks that Threshold could determine to
abandon the development of evofosfamide as a result of inadequate
resources, negative or inconclusive clinical trial or toxicology
study results, the failure to obtain regulatory approval of
evofosfamide, or otherwise; the impact of the reduction in
employees on Threshold's business and unanticipated charges not
currently contemplated that may occur as a result of such
reduction. 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 May 15, 2017 and is available
from the SEC's website (www.sec.gov) and on our website
(www.thresholdpharm.com) under the heading "Investors," and in
other filings that Threshold will make with the SEC in connection
with the proposed transactions, including the registration
statement and the proxy statement/prospectus described above under
"Important Information and Where to Find It." 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 |
|
|
March 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
Research
and development |
|
|
1,590 |
|
|
|
6,005 |
|
General
and administrative |
|
|
2,853 |
|
|
|
2,249 |
|
Total Operating
Expenses |
|
|
4,443 |
|
|
|
8,254 |
|
|
|
|
|
|
Loss from operations |
|
|
(4,443 |
) |
|
|
(8,254 |
) |
|
|
|
|
|
Interest
income (expense), net |
|
|
33 |
|
|
|
32 |
|
Other
income (expense), net (1) |
|
|
(664 |
) |
|
|
370 |
|
|
|
|
|
|
Net loss |
|
|
(5,074 |
) |
|
|
(7,852 |
) |
|
|
|
|
|
Net loss per
common share: |
|
|
Basic |
|
$ |
(0.07 |
) |
|
$ |
(0.11 |
) |
Diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.11 |
) |
|
|
|
|
|
Weighted-average shares used in per common |
|
|
|
|
share calculations: |
|
|
Basic |
|
|
71,575 |
|
|
|
71,488 |
|
Diluted |
|
|
71,575 |
|
|
|
71,488 |
|
|
|
|
|
|
(1)
Non-cash income (expense) related to the change in fair value of
the Company's outstanding warrants, classified as other income
(expense). |
|
|
|
THRESHOLD PHARMACEUTICALS, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(in thousands) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
|
(unaudited) |
|
(1) |
Assets |
|
|
|
|
|
|
|
Cash, cash equivalents and |
|
|
|
marketable securities |
$ |
17,601 |
|
$ |
23,551 |
|
Notes receivable |
|
2,000 |
|
|
- |
|
Prepaid expenses and other current assets |
|
352 |
|
|
623 |
|
Property and equipment, net |
|
- |
|
|
109 |
|
Total assets |
$ |
19,953 |
|
$ |
24,283 |
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
Total current liabilities |
$ |
2,210 |
|
$ |
2,616 |
|
Long-term liabilities (2) |
|
2,416 |
|
|
1,779 |
|
Stockholders' equity |
|
15,327 |
|
|
19,888 |
|
Total liabilities and stockholders' equity |
$ |
19,953 |
|
$ |
24,283 |
|
|
|
|
|
(1) Derived from audited financial statements |
(2) Includes as of March 31, 2017 and December 31 2016, $2.4
million and $1.7 million of warrant liability, respectively. |
|
Contact:
Denise Powell
denise@redhousecomms.com
510.703.9491
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