Catalyst in Threshold Pharmaceuticals; Interim Trial Data by Year’s-End

Since reporting 2Q earnings on August 2nd, Threshold Pharmaceuticals (NASDAQ:THLD) gained 25% and is on track to end the month around $8.70, a $.50 premium to Friday’s opening price. On Wednesday the company announced upcoming presentations at two investor conferences, Stifel Nicolaus and BioCentury NewsMakers, on the 5th and 7th. The announcement helped bolster shares into the end of the week as many investors expect new trial data on TH-302, Threshold’s only pipeline product in trials for a myriad of oncology indications. The most recent quarterly report prompted this month’s gains, including details about milestone payments from development-partner Merck KGaA (NYSE:MRK) and guiding for data from three clinical trials by the end of 2012. Stifel Nicolaus initiated coverage with a Buy rating on August 24 based on projected royalty revenues from Threshold’s cancer compound; the analyst believes Threshold will be profitable in 2017.

Threshold finished testing TH-302 with Gemzar, from Eli Lilly (NYSE:LLY), in a Phase II clinical trial for pancreatic cancer last year. They reported promising top-line data in February, causing shares to jump more than 100%; the company will report overall data by the end of the year. The company also said it will reveal data from two other Phase I trials in 2012 – for multiple myeloma and renal cell carcinoma/gastrointestinal stromal tumors. With two conferences less than a week away, investors are buying into what they suspect may be a catalyst for THLD and shares are approaching their 52-week high of $9.07.

Management believes it can operate for another year based on current cash and milestone payments, however as with most biotechs, THLD will probably raise capital within a few months to insure operations continue beyond 2013. The company will likely seek financing after trial data becomes public – if positive – as share price will increase. With data presentation pending, THLD is worth keeping an eye on through the end of the year, but this week’s gains may have been caused by high-volume trading and could fall off without a catalyst to sustain.