Merck and Threshold Announce Global Agreement to Co-Develop and Commercialize Phase III Hypoxia-Targeted Drug TH-302

Phase III soft tissue sarcoma trial ongoing; randomized Phase II pancreatic cancer trial expected to report in February 2012

06-Feb-2012 - Germany

Merck KGaA announced that a global agreement was signed with Threshold Pharmaceuticals, Inc. to co-develop and commercialize TH-302, Threshold’s small molecule hypoxia-targeted drug. TH-302 is currently being investigated 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 top-line results are expected in February, as well as additional clinical studies in other solid tumors and hematological malignancies.

Under the terms of the agreement, Merck will receive co-development rights, exclusive global commercialization rights and will provide Threshold an option to co-commercialize the therapeutic in the United States. In exchange, Threshold will receive an upfront payment of € 19 million ($ 25 million) and could receive up to € 26.5 million ($ 35 million) in additional development milestones during 2012. Threshold is also eligible to receive a € 15 million ($ 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 will jointly develop TH-302 in all other cancer indications being pursued. Merck will pay 70% of worldwide development costs for TH-302.

Subject to FDA approval in the United States, Merck 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 up to 50% of the profits in the United States, based on certain revenue tiers. Outside of the United States, Merck will be solely responsible for the commercialization of TH-302 with Threshold receiving a tiered, double-digit royalty on sales in these territories.

“The addition of TH-302 to our pipeline provides an important opportunity in several different tumor types to expand our oncology development program,” said Susan Jane Herbert, Head of Global Business Development and Strategy at the Merck Serono division. “Given the fact that pancreatic cancer is a very difficult to treat indication, successful Phase II results could represent important upside for our company.”

TH-302 is a hypoxia-targeted drug that is thought to be activated under tumor hypoxic conditions, a hallmark for many cancer indications. Areas of low oxygen levels (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.

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