A deal with first-in-class cancer potential
March 2012
by Jeffrey Bouley  |  Email the author


DARMSTADT, Germany—Early February saw Merck Serono, a division of German company Merck KGaA, announce a global agreement with South San Francisco-based Threshold Pharmaceuticals Inc. to co-develop and commercialize TH- 302, Threshold's small-molecule, hypoxia-targeted drug.  
TH-302 is currently under investigation in a global Phase III clinical trial in patients with soft tissue sarcoma, a randomized Phase II trial in patients with advanced pancreatic cancer—from which topline results came out in late-February—and additional clinical studies in other solid tumors and hematological malignancies.
"Threshold, and specifically TH-302, have been on Merck Serono's radar screen for some considerable time," Susan Jane Herbert, head of global business development and strategy for Merck Serono, tells ddn. "As a company, we also regularly review the landscape of clinical targets in oncology, and as of 2010, TH-302 started to emerge as one of the leading programs of interest."  
By early 2011, that led Merck into confidential discussions with Threshold, and Herbert says there were "several- fold reasons" why Threshold and TH-302 were of interest to Merck. 
"First of all, it was one of the few available late-stage oncology opportunities with unpartnered U.S. and E.U. rights fitting our portfolio priorities," she notes. "TH-302 specifically also fitted with our screening criteria given its novelty as an innovative drug, in this case a targeted cytotoxic, with first-in-class potential. Also, scientific evidence has to drive what we do, and with TH-302 the concept and mode of action had been confirmed against a broad spectrum of tumor types, so the evidence was sufficiently compelling for us to wish to engage."  
The terms of the agreement call for Merck to receive co-development and exclusive global commercialization rights, while it will provide Threshold an option to co-commercialize the therapeutic in the United States. In exchange, Threshold gets an upfront payment of approximately $25 million and could receive as much as $35 million in additional development milestones during 2012. Threshold is also eligible to receive a $20 million milestone payment based on positive results from its randomized Phase II trial in pancreatic cancer.  
In the United States, Threshold will have primary responsibility for development of TH-302 in the soft tissue sarcoma indication. Threshold and Merck KGaA will jointly develop TH-302 in all other cancer indications being pursued. Merck KGaA will pay 70 percent of worldwide development costs for TH-302.  
Subject to U.S. Food and Drug Administration approval in the United States, Merck KGaA will initially be responsible for commercialization of TH-302 with Threshold receiving a tiered, double-digit royalty on sales. Under the royalty-bearing portion of the agreement, Threshold retains the option to co- promote TH-302 in the United States. Additionally, Threshold retains the option to co-commercialize TH-302, allowing the company to participate in as much as half of the profits in the United States based on certain revenue tiers. Outside of the United States, Merck KGaA will be solely responsible for the commercialization of TH-302 with Threshold receiving a tiered, double-digit royalty on sales in these territories.
Zacks Investment Research, which currently has a Zacks #4 rank (short-term "sell" rating) on Merck KGaA, wrote in an investor note about the deal, "We believe this agreement is a positive development for the company as it will help expand Merck KGaA's oncology portfolio."  
Eric Schmidt, an analyst with Cowen & Co., wrote in an investor note for his company that the deal "has several favorable aspects," adding, "It provides relief from a near-term financing overhang, validation of TH-302's potential from an external party, the financial resources ability to expand TH-302's development beyond pancreatic cancer and sarcoma, and Threshold with 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 is going to bring to the development of TH-302, and the expertise in clinical development 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 a shared vision for TH-302."  
TH-302 is a hypoxia-targeted drug that is thought to be activated under tumor hypoxic conditions, which Merck KGaA calls "a hallmark for many cancer indications," as areas of hypoxia within tissues are common in many solid tumors due to insufficient blood vessel growth. Similarly, the bone marrow of patients with hematological malignancies has also been shown, in some cases, to be extremely hypoxic.
TH-302 has been investigated in more than 550 patients in Phase I/II clinical trials to date in a broad spectrum of tumor types, both as a monotherapy and in combination with chemotherapy treatments and other targeted cancer drugs. Threshold has several ongoing clinical trials including, but not limited to, a controlled Phase II trial of TH-302 in combination with gemcitabine versus gemcitabine alone in patients with advanced pancreatic cancer and a Phase III study evaluating TH-302 in combination with doxorubicin versus doxorubicin alone in patients with soft tissue sarcoma.
"Merck Serono Oncology is a critical lever of our future pipeline and business success in the short and long term," Merck's Herbert notes. "Our focus is developing products that provide beneficial therapeutic outcomes and create new options for cancer patients. A principle on which we focus in oncology is that 'combination is key,' and one aspect of this is we aim to develop products that target multiple aspects of the disease process and are suitable for use in combination with established therapies. In order to optimize therapeutic success, our focus is to combine approaches that target the following three areas of the disease process: the tumor cell directly, the tumor's local environment or the patient's immune system. TH-302 has many attributes that answer to our strategic goals."

Threshold announces positive Phase IIb trial results for TH-302 in patients with pancreatic cancer  
SOUTH SAN FRANCISCO, Calif.— Threshold Pharmaceuticals Inc. announced Feb. 21 that its 214-patient randomized controlled Phase IIb clinical trial evaluating the efficacy and safety of two doses of the investigational agent TH-302 in combination with gemcitabine compared to gemcitabine alone in patients with first-line advanced pancreatic cancer achieved its primary endpoint, with a 63 percent improvement in progression-free survival and a safety profile consistent with previous studies.  
"With the results of this trial, we are again very encouraged that TH-302 is conferring benefit to patients with aggressive and difficult to treat cancers," said Dr. Barry Selick, CEO of Threshold. "We look forward to its ongoing development with our partner Merck KGaA in this and other indications."  
The combination was well tolerated, with a safety profile that was consistent with the company's prior study of this combination regimen. As in that study, skin and mucosal toxicities related to TH-302 were dose-dependent but not dose limiting.
"This study provides the proof of concept demonstration that TH-302 contributes to the efficacy of a known active agent and supports the rationale for combining TH-302, a hypoxia targeting agent, with other approved therapies," said Stew Kroll, senior vice president of biostatistics and clinical operations of Threshold.
Code: E031205

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