In recovery mode, Threshold Pharma gets hoped-for licensing deal

Biotech is preparing for a planned merger with Molecular Templates

Eighteen months after being poleaxed by the failure of its lead drug, Threshold Pharma's recovery efforts—including a planned merger—are looking brighter thanks to a licensing deal with Taiwan biotech OBI Pharma.

OBI is buying rights to TH-3424—billed by Threshold as a first-in-class drug targeting cancers that overexpress the enzyme aldo-keto reductase 1c3 (AKR1C3)—for an undisclosed, one-off payment. The Taiwan firm gets rights to the drug in all world markets, but excluding several Asian countries including China, Japan and India.

The drug, which will be renamed OBI-3424, is a prodrug that releases a tumor cell-killing alkylating agent in the presence of AKR1C3, seen in a number of hard-to-treat cancers, including liver and prostate cancer as well as T-cell acute lymphoblastic leukemia. OBI says it plans to file for approval to start trials in the U.S. early next year.

In December 2015, Threshold was hit by the failure of its lead cancer drug evofosfamide (TH-302)—formerly partnered with Merck KGaA—in two phase 3 trials, and the following year a second candidate called tarloxotinib flunked a phase 2 proof-of-concept study in skin cancer and was dropped.

Threshold still hasn't wholly given up on the drug, as it maintains it saw an improvement in overall survival among a subset of Asian patients in Merck's MAESTRO study. Discussions with the Japanese authorities about the possibility of a marketing application based on the data came to naught, however, and the company has been informed it has to carry out another trial.

For now, its focus on evofosfamide is on a clinical trial looking at the drug in combination with Bristol-Myers Squibb's checkpoint inhibitor Yervoy—which is being carried out in collaboration with MD Anderson Cancer Centre—and on investigator-led trials of the drug alongside angiogenesis inhibitor drugs.

In a recent SEC filing, Threshold said it had resources on hand for another 12 months or so of operations and was looking at partnering TH-3424 and possibly another early-stage candidate—PET imaging agent HX4—to help fund future development of evofosfamide.

The embattled biotech called in strategic advisers in the wake of the phase 3 failure to work out which way to turn, and in March agreed a merger with Molecular Templates, pooling their respective cancer pipelines with a $20 million venture cash injection pledge from Longitude Capital.

That deal hasn't yet gone through, but if it comes to fruition will see the two companies operate under the Molecular Templates banner, adding the latter's lead candidate MT-3724, an anti-CD20 drug in a phase 1 trial that has shown activity in heavily pre-treated non-Hodgkin lymphoma (NHL) patients, to their joint pipeline.

With the OBI licensing deal in hand, Threshold's appeal to its would-be merger partner looks likely to have gone up.