Threshold's Underwhelming News Overwhelms Its Stock

The second try didn't appear to work for Threshold Pharmaceuticals (NAS: THLD) . The company provided additional details over the weekend about preliminary results from clinical trials of TH-302. Earlier news about these trials released in mid-September resulted in shares falling 20%. The latest update contained some good news, but the stock still tumbled 11% in intraday trading Monday.

What it means
Back in February, the company announced that a phase 2b trial of patients with advanced pancreatic cancer taking TH-302 combined with gemcitabine, a cancer drug originally sold by Eli Lilly (NYS: LLY) , extended progression-free survival rates compared to patients taking gemcitabine alone. Shares surged on the news.

On Sept. 17, Threshold revealed more news about the clinical trials. This time, the company stated that TH-302 combined with gemcitabine only reduced the risk of death by 4.5%. That statistically-insignificant-level improvement disappointed investors, and shares fell.

Over this past weekend, Threshold presented data that showed how "crossover" patients -- those who began taking TH-302 after their tumors restarted growth -- negatively skewed the initial results that were reported. Excluding these crossover patients, the study found that TH-302 combined with gemcitabine reduced the relative risk of death by around 25% compared to gemcitabine alone.

This news also underwhelmed investors. Why? The reassessment of the data doesn't carry as much weight because it wasn't part of the original analysis. Also, it's possible that excluding crossover patients distorts the results if the control arm patients were sicker than the patients using TH-302.

The biggest takeaway from the most recent Threshold developments is that a little good news sometimes just isn't enough good news.

Looking ahead
The current reality is that Threshold fights a battle of public perception against two potential rival drugs: Abraxane from Celgene (NAS: CELG) and bavituximab from Peregrine (NAS: PPHM) . The company appears to be winning the battle on one front, with Peregrine stumbling over data discrepancies in reported trials for bavituximab in the treatment of lung cancer.

But Threshold is losing the perception battle with Celgene. While Threshold presented actual clinical data at the weekend's European Society of Medical Oncology conference, reports are that the real buzz was reserved for Abraxane. The drug is in phase 3 trials, but no results have been announced yet.

That's how things stand for now. However, the possibility exists that Abraxane could have disappointing phase 3 results. And TH-302 could have a solid phase 3 trial that then makes up for the less-than-inspiring results from earlier stages. There is also potential for TH-302 to do well in clinical trials under way for other types of cancer.

At this point, though, the prudent approach for investors appears to be staying on the sidelines. Shares fell significantly with merely underwhelming good news. If Abraxane's study results are impressive, expect Threshold stock to get hit hard. Good news for Celgene could be overwhelmingly bad news for Threshold.

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