Merck KGaA signs cancer deal with Threshold Pharmaceuticals

Deal provides Threshold with an upfront payment of $25 million plus further potential milestones and royalties as well as an option to co-commercialize in the United States

Jeffrey Bouley
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DARMSTADT, Germany—Merck Serono, a division of Merck KGaA, announced Feb. 3 that it had signed a global agreement with ThresholdPharmaceuticals Inc., based in South San Francisco, Calif., to co-develop and commercializeTH-302, Threshold's small molecule hypoxia-targeted drug.
TH-302 is currentlybeing investigated in a global Phase III clinical trial in patients with soft-tissue sarcoma, a randomized Phase II trial in patients with advancedpancreatic cancer from which top-line results are expected in February, as wellas additional clinical studies in other solid tumors and hematologicalmalignancies.
Under the terms of the agreement, Merck willreceive co-development rights, exclusive global commercialization rights andwill provide Threshold an option to co-commercialize the therapeutic in theUnited States. In exchange, Threshold will receive an upfront payment of about $25 million and could receive up to around $35 million inadditional development milestones during 2012. Threshold is also eligible toreceive a $20 million milestone payment based on positiveresults from its randomized Phase II trial in 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 worldwide developmentcosts for TH-302.
Subject to FDA approval in the United States,Merck KGaA will initially be responsible for commercialization of TH-302 withThreshold receiving a tiered, double-digit royalty on sales. Under theroyalty-bearing portion of the agreement, Threshold retains the option toco-promote TH-302 in the United States. Additionally, Threshold retains theoption to co-commercialize TH-302 allowing the company to participate in up to50 percent of the profits in the United States, based on certain revenue tiers.Outside of the United States, Merck KGaA will be solely responsible for thecommercialization of TH-302 with Threshold receiving a tiered, double-digitroyalty on sales in these territories.
Reportedly, the deal is worth as much as $550 million to Threshold over the long run if everything falls into place.

"The addition of TH-302 to our pipelineprovides an important opportunity in several different tumor types to expandour oncology development program," said Susan Jane Herbert, head of global business development and strategy for Merck Serono. "Given the fact thatpancreatic cancer is a very difficult to treat indication, successful Phase IIresults could represent important upside for our company."
"We are excited by the new resources that ourpartnership is going to bring to the development of TH-302, and the expertisein clinical development and commercialization that Merck will contribute tothis program," said Barry Selick, president and CEO of Threshold. "Thiscollaboration provides Threshold a strong and committed partner with a sharedvision for TH-302."
TH-302 is a hypoxia-targeted drug that is thoughtto be activated under tumor hypoxic conditions, reportedly a hallmark for many cancerindications. Areas of low oxygen levelswithin tissues are common inmany solid 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 patientsin Phase I/II clinical trials to date in a broad spectrum of tumor types, bothas a monotherapy and in combination with chemotherapy treatments and othertargeted cancer drugs.

Jeffrey Bouley

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