Threshold dumps two-thirds of its staff after a crushing failure

Threshold CEO Barry Selick

Threshold Pharmaceuticals ($THLD), whose Merck KGaA-partnered oncology therapy failed in a pair of trials this month, is laying off the majority of its workers and rallying around a midstage cancer drug.

The South San Francisco company is letting go of two-thirds of its staff, leaving between 20 and 25 workers by the end of the first quarter of 2016, management said. The move will cost about $2.6 million, Threshold said.

The company's cuts follow tandem Phase III failures for TH-302, which failed to meet its primary goals in pancreatic cancer and soft tissue sarcoma in results released earlier this month. The data, disclosed by partner Merck KGaA, decimated Threshold's market cap and sent its shares into penny-stock territory.

Now Threshold is moving forward with tarloxotinib bromide, a wholly owned drug that targets the EGFR pathway to disrupt tumor growth. The drug is in the midst of Phase II trials in non-small cell lung cancer and squamous cell carcinoma of the head and neck or skin, the company said. Threshold closed the third quarter with $56.4 million in cash, and the company plans to put what it has left into bringing those trials to fruition.

"I would like to express my sincere gratitude to our employees who are being affected by this difficult but necessary action," Threshold CEO Barry Selick said in a statement. "This is a loss to our Threshold family of talented and dedicated individuals who have worked with integrity and passion toward improving the lives of people living with cancer."

Meanwhile, Merck KGaA and Threshold haven't entirely given up on TH-302, also known as evofosfamide. Each has said it's evaluating potential next steps for the drug, including future clinical trials.

- read the statement