Threshold Pharma (THLD) Says Two Studies Didn't Meet Activity Thresholds, Plans Workforce Reduction

September 29, 2016 5:42 PM EDT
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Threshold Pharma (NASDAQ: THLD) disclose in an SEC filing:

On September 29, 2016, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Threshold Pharmaceuticals, Inc. (“Threshold” or the “Company”) committed to implementing a workforce reduction constituting approximately a quarter of the Company’s workforce. The Company notified employees affected by the workforce reduction on September 29, 2016. All affected employees will be eligible to receive, among other things, specified severance payments based on the applicable employee’s level and years of service with the Company (except to the extent that the affected employee is a party to a pre-existing severance agreement with Threshold), and will be eligible for an up to 2-year extension of the post-termination exercise period for their outstanding vested stock options. The Company expects to complete the workforce reduction by October 7, 2016.

The Company is undertaking the workforce reduction to reduce its expenses and preserve capital while focusing the Company’s efforts on studies of evofosfamide in combination with immune checkpoint antibodies in ongoing collaboration with The University of Texas MD Anderson Cancer Center, continuing discussions with Japanese regulatory authorities regarding potential registration pathways for evofosfamide in Japan for the treatment of pancreatic cancer, and pursuing IND-enabling studies of TH-3424 in collaboration with Ascenta Pharmaceuticals, Ltd.

As a result of the workforce reduction, the Company estimates that it will record in the fourth quarter of 2016, a one-time severance-related charge totaling approximately $0.9 million, which includes a non-cash charge of approximately $300,000 related to the extension of the post-termination exercise period for the outstanding vested stock options for the affected employees. The severance-related charge that the Company expects to incur in connection with the workforce reduction is subject to a number of assumptions, and actual results may differ materially. The Company may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the workforce reduction.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On September 29, 2016, Stewart Kroll, the Company’s Chief Operating Officer, who is a “named executive officer” as defined under the federal securities laws, was notified that his position would be eliminated as part of the workforce reduction, effective September 30, 2016. Mr. Kroll will depart in good standing with Threshold. Under the Company’s severance agreements with Mr. Kroll, Mr. Kroll is entitled to severance benefits in the form of twelve months of his base salary as in effect as of the September 30, 2016 termination date. Mr. Kroll is also eligible for an up to 2-year extension of the post-termination exercise period for his outstanding vested stock options, which benefit was provided to all employees affected by the workforce reduction reported under Item 2.05 hereof.

Item 8.01 Other Events.

On September 29, 2016, the Company announced that its Phase 2 proof-of-concept trial evaluating tarloxotinib bromide for the treatment of patients with mutant EGFR-positive, T790M-negative advanced non-small cell lung cancer(NSCLC) progressing on an EGFR tyrosine kinase inhibitor (TH-CR-601) did not achieve its primary interim response rate endpoint. While the Company’s other Phase 2 proof-of-concept trial evaluating tarloxotinib bromide for the treatment of patients with recurrent or metastatic squamous cell carcinomas of the skin met its primary interim response rate endpoint, the other two arms of the study, evaluating tarloxotinib bromide for the treatment of patients with recurrent or metastatic squamous cell carcinomas of the head and neck did not achieve their primary interim response rate endpoint, and the overall results from the two trials didn't meet the activity thresholds required to justify further development investment by the Company. Both clinical trials utilized a Simon two-stage design to ensure adequate efficacy as measured by tumor response to support continued enrollment. Tumor response was evaluated at baseline and every eight weeks using the Response Evaluation Criteria in Solid Tumors (RECIST). In the first stage of the TH-CR-601 trial, a response rate greater than or equal to 4 out of 19 patients was the threshold for expansion and continuation of the trial. . Per protocol, response is defined as tumor shrinkage (a partial or complete response). Although 7 of 21 assessed patients achieved stable disease, no patients achieved a confirmed partial response. In the first stage of the SCCS arm of the TH-CR-602 trial, a confirmed partial response was observed in 1 of 7 patients. According to the study design, the response rate was sufficient to expand the trial to evaluate additional patients. However, of the 22 SCCHN patients who were assessed, although 8 achieved stable disease, none achieved a confirmed partial response.

A copy of the press release is filed as Exhibit 99.1 hereto and is incorporated by reference herein.

Threshold Pharmaceuticals, Inc. (Nasdaq: THLD) today announced interim data from its two Phase 2 proof-of-concept clinical trials of tarloxotinib and outlined its plans to focus company resources on the more clinically-advanced evofosfamide program as well as an earlier-stage anticancer candidate, TH-3424.

  • -- Tarloxotinib Primary Interim Response Rate Endpoint Achieved in Patients with Recurrent or Metastatic Squamous Cell Carcinoma of the Skin (SCCS) but not Achieved in Patients with Metastatic Squamous Cell Carcinoma of the Head and Neck (SCCHN) or Advanced EGFR-Mutant, T790M-Negative Non-Small Cell Lung Cancer (NSCLC); Company to Discontinue Investment in its Tarloxotinib Program --
  • -- Company to Focus on Evofosfamide in Combination with Immune Checkpoint Antibodies in Ongoing Collaboration with The University of Texas MD Anderson Cancer Center; Potential Registration of Evofosfamide in Japan, and IND-Enabling Studies of TH-3424 --

"While the response observed in our squamous cell carcinoma of the skin study with tarloxotinib was encouraging, the overall results from the two studies didn't meet the activity thresholds required to move forward the molecule forward despite the promising results seen in preclinical translational studies,” said Barry Selick, Ph.D., Chief Executive Officer of Threshold. "As a result, we are making no further investment in this program. Instead, we plan to build on the efforts of our collaborator, Dr. Michael Curran of The University of Texas MD Anderson Cancer Center, to demonstrate the potential therapeutic value of adding evofosfamide to immune checkpoint inhibition, to continue to pursue discussions with Japanese regulatory authorities regarding potential registration pathways for evofosfamide, and to advance TH-3424 through IND-enabling toxicology studies with the goal of reaching the clinic in 2017. We plan to provide additional operational guidance in the fourth quarter of 2016."

About the Tarloxotinib Program
Tarloxotinib bromide (the International Nonproprietary Name, previously known as TH-4000), or "tarloxotinib", is a prodrug designed to selectively release a covalent (irreversible) EGFR tyrosine kinase inhibitor under severe hypoxia, a feature of many solid tumors. The interim results from the two Phase 2 proof-of-concept clinical trials evaluating the efficacy and safety of tarloxotinib are outlined below. Both clinical trials utilized a Simon two-stage design to ensure adequate efficacy as measured by tumor response to justify continued enrollment. Tumor response was evaluated at baseline and every eight weeks using the Response Evaluation Criteria in Solid Tumors (RECIST). As a result, and taking into consideration the totality of the clinical data with tarloxotinib, enrollment in both Phase 2 clinical trials and further development of tarloxotinib will be discontinued.

Tarloxotinib in patients with recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN) or skin (SCCS) (TH-CR-602):

· In the first stage of the SCCS arm of the trial, a confirmed partial response was observed in 1 of 7 patients. According to the study design, the response rate was sufficient to expand the trial to evaluate additional patients.

· However, of the 22 SCCHN patients who were assessed, although 8 achieved stable disease, none achieved a confirmed partial response.

Tarloxotinib in patients with EGFR-mutant, T790M-negative, advanced non-small cell lung cancer (NSCLC) (TH-CR-601):

· In the first stage of the trial, a response rate greater than or equal to 4 out of 19 patients was the threshold for expansion and continuation of the trial. . Per protocol response is defined as tumor shrinkage (a partial or complete response).

· Although 7 of 21 assessed patients achieved stable disease, no patients achieved a confirmed partial response.

Threshold licensed exclusive worldwide rights to tarloxotinib from the University of Auckland, New Zealand, in September 2014.



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