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Friday, 09/30/2016 4:05:17 PM

Friday, September 30, 2016 4:05:17 PM

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Threshold Pharmaceuticals, Inc.

After Threshold announced negative interim results with tarloxotinib, a hypoxia induced irreversible (covalent) epidermal growth factor receptor (EGRF) inhibitor, in two Phase II trials, shares are subsequently plunging nearly 56%. Because tarloxotinib failed to meet prespecified efficacy thresholds, all future development on the pipeline drug has been halted.

Additionally, the biotech firm announced to retain capital, its workforce will be reduced, instead opting to shift focus to regulatory discussions in Japan for its pipeline pancreatic cancer drug evofosfamide.

Despite the adverse results for tarloxotinib and THLD reduction in workforce, William Blair analyst John Sonnier reiterates an Outperform rating on shares of THLD without listing a price target.

Sonnier explains, “We believe the potential regulatory path forward with evofosfamide in pancreatic cancer in Japan could transform the company’s valuation and P&L statement. With $33.6 million in cash at the end of the second quarter, we believe the capital should be sufficient to bridge the company to the next material inflection point.”

Furthermore, the analyst understands the biotech firm’s choice to terminate the development on the pipeline drug, asserting, “We agree with management’s decision to discontinue development of tarloxotinib due to the lack of a clear efficacy signal from the Phase II programs.”

In THLD’s favor, Sonnier sees promise as the firm pursues Investigational New Drug-enabling studies with TH-3424, a novel AKR1C3 activated prodrug designed to treat cancer. The drug has already indicated to be considerably upregulated in particular kinds of tumors, including hepatocellular carcinoma.

“Preclinical data supports the ability of TH-3424 to effectively kill cancer cells with upregulated AKR1C3, and we look forward to future updates with the compound,” the analyst concludes.

http://www.smarteranalyst.com/2016/09/30/william-blair-weighs-threshold-pharmaceuticals-inc/
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