Loss at THLD Narrower Than Expected

Threshold Pharmaceuticals Inc.’s ( THLD - Snapshot Report ) fourth quarter 2010 net loss of $0.19 per share was narrower than the Zacks Consensus Estimate of a loss of $0.21. However, the loss incurred in the final quarter of 2010 was wider than the year ago loss by $0.04. The wider year-over-year loss was attributable to higher operating costs incurred in the final quarter of 2010.

Threshold Pharma, which focuses on developing products for the treatment of cancer, currently has no marketed products. The company reported no revenues in the final quarter of 2010 like the year ago period.

Operating expenses in the reported quarter climbed 11.5% to $6.1 million. A 15% rise in research and development (R&D) expenses to $4.7 million mainly contributed to the increase in operating costs. General and administrative (G&A) expenses remained flat at $1.4 million.

The rise in R&D expenses was attributable to the efforts made by Threshold Pharma to develop its pipeline candidate, TH-302, for various cancer indications. TH-302 targets the severe hypoxic regions believed to be present in all forms of solid tumors. Threshold Pharma is evaluating TH-302 in three studies. TH-302 is being evaluated in conjunction with Eli Lilly and Company’s ( LLY - Analyst Report ) Gemzar in patients suffering from advanced pancreatic cancer in the most advanced study (phase II).

For full-year 2010, Threshold Pharma suffered a loss of $0.56 per share as against a loss of $1.21 in 2009. The Zacks Consensus Estimate hinted at a loss of $0.57 for 2010. Operating expenses climbed 12% to $23.9 million in 2010. Threshold Pharma expects operating costs to increase further in 2011 as it intends to continue the development of TH-302. Operating expenses are projected in the range of $27 million-$29 million in 2011.

Our Recommendation

Currently, we have a ‘Neutral’ stance on Threshold Pharma which is supported by a Zacks# 3 Rank (short-term ‘Hold’ recommendation).