Merck KGaA puts a lead cancer drug on the chopping block, Threshold craters

The clinical misery at Merck KGaA is continuing unabated this week. The German pharma company reported early today that its cancer therapy TH-302 failed both Phase III studies, forcing it to abandon two indications while reconsidering its commitment to a drug that has long been hailed as a top program in their pipeline.

"We decided today not to pursue investigation of evofosfamide in soft tissue sarcoma and pancreatic cancer, and we will be making a quick decision on the future of the ongoing evofosfamide clinical program," said R&D chief Luciano Rossetti in a statement that is not likely to inspire much enthusiasm for the drug's future.

Merck in-licensed TH-302, also called evofosfamide, from Threshold Pharmaceuticals ($THLD), which had most of its eggs resting in this one basket. Once Merck KGaA put out the news about the trial flops, South San Francisco-based Threshold's shares were eviscerated, dropping 83% by mid-morning, which puts its shares in penny stock territory.

TH-302 is triggered by hypoxia,where low oxygen levels in solid tumors set the stage for the drug to begin its work.

Merck KGaA had repeatedly cited TH-302 as a top program for the company as it mounted its latest comeback attempt. Merck KGaA has been afflicted by repeated Phase III setbacks, including the cancer vaccine Stimuvax, which was killed off, then revived, then killed off again. The company has repeatedly sought out new R&D chiefs after going more than a decade without developing a single major new drug product.

Threshold CEO Barry Selick frankly acknowledged that this latest failure for its main program underscored its prolonged inability to demonstrate that its drug can effectively target cancer.

"Threshold has been pursuing evofosfamide for over ten years in collaboration with world-class scientists and investigators throughout the world," Selick said in a statement. "While we believe there remains substantial data to support the role of hypoxia in cancer treatment resistance, we are deeply frustrated with our inability in these trials to impact that in a meaningful way."

For Merck KGaA, the big clinical bet will now focus almost exclusively on avelumab, its PD-L1 checkpoint inhibitor now partnered with Pfizer ($PFE), which paid $850 million in the industry's biggest upfront payment to collaborate on a runner-up immuno-oncology therapy. The German pharma dropped several collaborations about a year ago as it once again recalibrated its pipeline.

- here's the release from Merck
- see the release from Threshold

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