A deal with first-in-class cancer potential

Merck KGaA and Threshold announce global agreement to co-develop and commercialize Phase III hypoxia-targeted drug TH-302

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DARMSTADT, Germany—Early February saw Merck Serono, adivision of German company Merck KGaA, announce a global agreement with SouthSan Francisco-based Threshold Pharmaceuticals Inc. to co-develop andcommercialize TH-302, Threshold's small-molecule, hypoxia-targeted drug.
TH-302 is currently under investigation in a global PhaseIII clinical trial in patients with soft tissue sarcoma, a randomized Phase IItrial in patients with advanced pancreatic cancer—from which topline resultscame out in late-February—and additional clinical studies in other solid tumorsand hematological malignancies.
"Threshold, and specifically TH-302, have been on MerckSerono's radar screen for some considerable time," Susan Jane Herbert, head ofglobal business development and strategy for Merck Serono, tells ddn. "As a company, we also regularly review thelandscape of clinical targets in oncology, and as of 2010, TH-302 started toemerge as one of the leading programs of interest."
By early 2011, that led Merck into confidential discussionswith Threshold, and Herbert says there were "several-fold reasons" whyThreshold and TH-302 were of interest to Merck. 
"First of all, it was one of the few available late-stageoncology opportunities with unpartnered U.S. and E.U. rights fitting ourportfolio priorities," she notes. "TH-302 specifically also fitted with ourscreening criteria given its novelty as an innovative drug, in this case atargeted cytotoxic, with first-in-class potential. Also, scientific evidencehas to drive what we do, and with TH-302 the concept and mode of action hadbeen confirmed against a broad spectrum of tumor types, so the evidence wassufficiently compelling for us to wish to engage."
The terms of the agreement call for Merck to receiveco-development and exclusive global commercialization rights, while it willprovide Threshold an option to co-commercialize the therapeutic in the UnitedStates. In exchange, Threshold gets an upfront payment of approximately $25million and could receive as much as $35 million in additional developmentmilestones during 2012. Threshold is also eligible to receive a $20 millionmilestone payment based on positive results from its randomized Phase II trialin pancreatic cancer.
In the United States, Threshold will have primaryresponsibility for development of TH-302 in the soft tissue sarcoma indication.Threshold and Merck KGaA will jointly develop TH-302 in all other cancerindications being pursued. Merck KGaA will pay 70 percent of worldwidedevelopment costs for TH-302.
Subject to U.S. Food and Drug Administration approval in theUnited States, Merck KGaA will initially be responsible for commercializationof TH-302 with Threshold receiving a tiered, double-digit royalty on sales.Under the royalty-bearing portion of the agreement, Threshold retains theoption to co-promote TH-302 in the United States. Additionally, Thresholdretains the option to co-commercialize TH-302, allowing the company toparticipate in as much as half of the profits in the United States based oncertain revenue tiers. Outside of the United States, Merck KGaA will be solelyresponsible for the commercialization of TH-302 with Threshold receiving atiered, double-digit royalty on sales in these territories.
Zacks Investment Research, which currently has a Zacks #4rank (short-term "sell" rating) on Merck KGaA, wrote in an investor note aboutthe deal, "We believe this agreement is a positive development for the companyas it will help expand Merck KGaA's oncology portfolio."
Eric Schmidt, an analyst with Cowen & Co., wrote in aninvestor note for his company that the deal "has several favorable aspects,"adding, "It provides relief from a near-term financing overhang, validation ofTH-302's potential from an external party, the financial resources ability toexpand TH-302's development beyond pancreatic cancer and sarcoma, and Thresholdwith the ability to retain much of its strategic value by virtue of its U.S.co-promote option."
"We are excited by the new resources that our partnership isgoing to bring to the development of TH-302, and the expertise in clinicaldevelopment and commercialization that Merck will contribute to this program,"said Dr. Barry Selick, CEO of Threshold, in the news release about the deal."This collaboration provides Threshold a strong and committed partner with ashared vision for TH-302."
TH-302 is a hypoxia-targeted drug that is thought to beactivated under tumor hypoxic conditions, which Merck KGaA calls "a hallmarkfor many cancer indications," as areas of hypoxia within tissues are common in manysolid tumors due to insufficient blood vessel growth. Similarly, the bonemarrow of patients with hematological malignancies has also been shown, in somecases, to be extremely hypoxic. 
TH-302 has been investigated in more than 550 patients inPhase I/II clinical trials to date in a broad spectrum of tumor types, both asa monotherapy and in combination with chemotherapy treatments and othertargeted cancer drugs. Threshold has several ongoing clinical trials including,but not limited to, a controlled Phase II trial of TH-302 in combination withgemcitabine versus gemcitabine alone in patients with advanced pancreaticcancer and a Phase III study evaluating TH-302 in combination with doxorubicinversus doxorubicin alone in patients with soft tissue sarcoma.
"Merck Serono Oncology is a critical lever of our futurepipeline and business success in the short and long term," Merck's Herbertnotes. "Our focus is developing products that provide beneficial therapeuticoutcomes and create new options for cancer patients. A principle on which wefocus in oncology is that 'combination is key,' and one aspect of this is weaim to develop products that target multiple aspects of the disease process andare suitable for use in combination with established therapies. In order tooptimize therapeutic success, our focus is to combine approaches that targetthe following three areas of the disease process: the tumor cell directly, thetumor's local environment or the patient's immune system. TH-302 has manyattributes that answer to our strategic goals." 

Threshold announces positive Phase IIb trial results forTH-302 in patients with pancreatic cancer
SOUTH SAN FRANCISCO, Calif.— Threshold Pharmaceuticals Inc.announced Feb. 21 that its 214-patient randomized controlled Phase IIb clinicaltrial evaluating the efficacy and safety of two doses of the investigationalagent TH-302 in combination with gemcitabine compared to gemcitabine alone inpatients with first-line advanced pancreatic cancer achieved its primaryendpoint, with a 63 percent improvement in progression-free survival and asafety profile consistent with previous studies.
"With the results of this trial, we are again veryencouraged that TH-302 is conferring benefit to patients with aggressive anddifficult to treat cancers," said Dr. Barry Selick, CEO of Threshold. "We lookforward to its ongoing development with our partner Merck KGaA in this andother indications."
The combination was well tolerated, with a safety profilethat was consistent with the company's prior study of this combination regimen.As in that study, skin and mucosal toxicities related to TH-302 weredose-dependent but not dose limiting.
"This study provides the proof of concept demonstration thatTH-302 contributes to the efficacy of a known active agent and supports therationale for combining TH-302, a hypoxia targeting agent, with other approvedtherapies," said Stew Kroll, senior vice president of biostatistics and clinicaloperations of Threshold.

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