Pharmaceuticals, 1st try, 2nd try, third try... Threshold (NASDAQ: THLD)

Pharmaceuticals, 1st try, 2nd try, third try… Threshold (NASDAQ: THLD)

Pharmaceuticals, 1st try, 2nd try, third try...  Threshold (NASDAQ: THLD)

Pharmaceuticals, 1st try, 2nd try, third try… Threshold (NASDAQ: THLD)

A number of times investors make their stock choices based on product announcements. Nothing reflects this like what happened to Threshold Pharmaceuticals (NASDAQ: THLD), which saw its stock fall in value in the days following its September 2011 announcement about the phase 2 study results for its drug TH-302 in treating pancreatic cancer.  Investors weren’t impressed by the median survival rate of 17.5 months and 70% one-year survival rate. Consequently, shares fell 20% in one day and made a steady downward movement in the following months.

However, savvy investors took notice of Threshold when it announced an updated result for another phase 2 study of TH-302. The announcement was made at the annual meeting of Connective Tissue Oncology Society that took place in Prague Czech Republic.  Median overall survival rate was 21.5 months. One-year survival rate was 73%, and two-year survival rate was 44%. The overall best response was 36%. Investors were impressed with Threshold’s TH-302.

Pancreatic cancer has been like an impregnable fortress to a large extent. Amgen (NASDAQ: AMGN) stopped phase 3 trials for its own drug sometimes ago. One of the few companies making headway is Celgene (NASDAQ: CELG), which recently reported positive results from a phase 3 study of Abraxene in treating pancreatic cancer. The number of Americans at risk of the disease, combined with the lack of safe and effective treatment, indicate good market prospects for TH-302 if it ultimately gains approval.

Threshold recently reported financial results for the third quarter ended September 30, 2012, and it showed encouraging statistics. Revenue for the third quarter was $1.8 million. The net loss for the quarter was $1.0 million, compared to a net loss of $4.0 million for the third quarter of 2011. Operating loss for the third quarter of 2012 was $4.0 million, compared to $7.8 million for the same period last year.

As of September 30, 2012, Threshold had $65.8 million in cash, cash equivalents, and marketing securities, with no debt outstanding. It recognized revenue of $1.8 million in the quarter, related to a $25 million upfront payment and $32.5 million in milestone payment earned during the first quarter for TH-302 with Merck KgaA, Darmstadt, Germany. Till date, the company has received $45 million in upfront and milestone payments. It could receive an additional $42.5 millions in potential milestone payment in the near term.

Threshold is enrolling for the phase 3 studies for TH-302. The FDA has agreed on a special protocol assessment with Merck KgaA for the study. Analysts think Threshold’s stock will rise to at least $10 per share, perhaps considerably more, if its study shows encouraging results. Some speculate the increase could be more than 140%. If they are correct, Threshold is onto something big. It may be too early to buy. But it is never too early to choose a great company and sticking with it for the long-term.


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