THLD, Threshold Pharmaceuticals, Inc.

** THLD reported that a global agreement was signed with Merck KGaA, Darmstadt, Germany, to co-develop and commercialize TH-302, THLD’s small molecule hypoxia-targeted drug.

Under the terms of the agreement, Merck will receive co-development rights, exclusive global commercialization rights and will provide THLD an option to co-commercialize the therapeutic in the United States.

THLD will receive an upfront payment of $25 million and could receive up to $35 million in additional development milestones during 2012. THLD is also eligible to receive a $20 million milestone payment based on positive results from its randomized Phase 2 trial in pancreatic cancer. According to THLD, total potential milestone payments are $525 million, comprised of $280 million in regulatory and development milestones and $245 million in sales-based milestones.

In the United States, THLD will have primary responsibility for development of TH-302 in the soft tissue sarcoma indication. THLD and Merck KGaA will jointly develop TH-302 in all other cancer indications being pursued. Merck KGaA will pay 70% of worldwide development costs for TH-302.

Subject to FDA approval in the United States, Merck KGaA will initially be responsible for commercialization of TH-302 with THLD receiving a tiered, double-digit royalty on sales.

Under the royalty-bearing portion of the agreement, THLD retains the option to co-promote TH-302 in the United States. Additionally, THLD 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 KGaA will be solely responsible for the commercialization of TH-302 with THLD receiving a tiered, double-digit royalty on sales in these territories.

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.

THLD has several ongoing clinical trials including, but not limited to, a controlled Phase 2 trial of TH-302 in combination with gemcitabine versus gemcitabine alone in patients with advanced pancreatic cancer and a Phase 3 study evaluating TH-302 in combination with doxorubicin versus doxorubicin alone in patients with soft tissue sarcoma.

Sarcomas are a group of aggressive cancers of connective tissue of the body for which there are currently limited treatment options. Soft tissue sarcomas are treated with surgery, chemotherapy and radiation.

Pancreatic cancer is a malignant neoplasm of the pancreas with current treatment options including surgery, radiotherapy and chemotherapy.

THLD is a biotechnology company focused on the discovery and development of drugs targeting tumor hypoxia, the low oxygen condition found in microenvironments of most solid tumors as well as the bone marrows of patients with some hematologic malignancies.

More about THLD at www.thresholdpharm.com

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