3 February 2012 - Threshold Pharmaceuticals Inc (NASDAQ:THLD) has signed a global agreement with Germany's Merck KGaA (ETR:MRK) for the joint development and commercialisation of TH-302, Threshold's small molecule hypoxia-targeted drug.

Under the terms of the deal, Merck will receive co-development rights and exclusive global commercialisation rights. Threshold will have an option to co-commercialise the drug in the US. In return, Threshold will receive an upfront payment of USD25m (EUR19m) as well as up to USD35m in development milestone payments during 2012. Threshold would also receive a USD20m milestone payment conditioned on the results from its randomised Phase II trial in pancreatic cancer. This would bring the total potential milestone payments to USD525m, comprised of USD280m in regulatory and development milestones and USD245m in sales-based milestones.

In the US, Threshold will be responsible for the development of TH-302 in the soft tissue sarcoma indication. The two companies will jointly develop TH-302 in all other cancer indications and Merck will cover 70% of worldwide development costs for the compound.

(USD1 = EUR0.759)