Why Shares of Threshold Pharmaceuticals Inc. Broke Higher Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares of the clinical-stage biopharma Threshold Pharmaceuticals rose by 18% today after the company announced that the Food and Drug Administrationgranted Fast Track designation to its experimental cancer drug, evofosfamide (TH-302), as a potential treatment for advanced pancreatic cancer. Evofosfamide is being co-developed with Merck KGaA and is presently in two late-stage trials for pancreatic cancer andadvanced soft tissue sarcoma, respectively.

The drug takes a novel approach to cancer treatment by targeting cells with low oxygen levels -- a condition common among tumors given that they frequently deform the surrounding vasculature. This approach, in theory, should help to limit damage to healthy tissues during treatment.

So what: Fast Track designation allows the two companies to submit a regulatory application for the drug on a rolling basis. What this means, in a nutshell, is that the ongoing late-stage clinical trial does not have to be completed to begin the process of submitting a regulatory filing.

Now what:Top-line results from these ongoing pivotal studies are expected out by year's end, according to today's press release. The odd part, though, is that the market is clearly doubting the drug's chances of meeting its primary endpoint, given Threshold's sub-$300 million market cap.

My take is that this has more to do with the indication than the drug. Advanced pancreatic cancer has proven to be an extremely difficult disease to treat, with many experimental drugs failing to show any clinical benefit whatsoever.

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That said,evofosfamide's midstage results, when used in conjunction withGemzar, were encouraging. Namely, the combo delivered a 41% reduction in the risk for disease progression or death, compared to the current standard of care.

While there is no guarantee the drug can replicate these results in a larger trial, I think this stock is certainly worth keeping tabs on heading into this data release.

The article Why Shares of Threshold Pharmaceuticals Inc. Broke Higher Today originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.