The last time that Threshold Pharmaceuticals (NASDAQ: THLD) announced phase 2 study results for its drug TH-302 in treating pancreatic cancer, things didn't go so well. Although the company announced that it was "pleased" with those results back in September, the market wasn't. Shares fell 20% in one day.

Threshold today announced updated results from another phase 2 study of TH-302 in treating soft tissue sarcoma. The company again said that it was "pleased" with the results. This time, though, the market seemed to agree. Shares jumped over 10% higher in early trading before drifting down to a more modest increase. 

Is Threshold on the threshold of something big? Let's take a look.

Most likely to succeed
The latest news release from Threshold about TH-302 actually was an update of results first announced in October 2011. A couple of key measurements improved from the announcement last year. The median overall survival rate was originally reported  as 17.5 months, while the updated results show the rate at 21.5 months. One-year survival rate increased from 70% in the initial report, to 73% in today's announcement.

According to the American Cancer Society, around 11,280 patients in the U.S. will be diagnosed with soft tissue sarcoma in 2012. The ACS estimates that close to 4,000 Americans will die from the cancer this year. These numbers, combined with the lack of safe and effective treatments, indicate good market prospects for TH-302 if it ultimately gains approval.

Threshold is now enrolling patients for a phase 3 study of TH-302 in the treatment of soft tissue sarcoma. This indication for now appears to be the area in which the company is most likely to succeed, simply because the company is farther along in the process. Success is far from guaranteed, though.

Against the odds
The outlook for TH-302 in treating pancreatic cancer is perhaps more iffy. Threshold initially reported promising results in February from use of TH-302 in combination with Lilly's (NYSE:LLY) Gemzar. The company even received a $20 million payment from its partner Merck KGaA for reaching a milestone related to progression-free survival.

However, the company's updated results in September showed an improvement in risk of death that wasn't statistically significant. Even though Threshold released more information later in the month that it felt bolstered the case for TH-302, investors weren't impressed. Shares dropped in the double-digits, and have maintained a steady downward trajectory ever since.

Pancreatic cancer has been like an impregnable fortress to a large extent. Amgen (NASDAQ:AMGN) stopped phase 3 trials for its pancreatic cancer drug ganitumab in August. Current drugs on the market, such as Gemzar, Roche's Tarceva, and Teva Pharmaceuticals' (NYSE:TEVA) Adrucil, aren't highly effective.

The only company making real headway is Celgene (NASDAQ:CELG). The company recently reported positive results from a phase 3 study of Abraxane in treating pancreatic cancer.

Looking ahead
Enrollment is still under way for the phase 3 study for TH-302 in treating soft tissue sarcoma. The FDA recently agreed on a Special Protocol Assessment with Merck KGaA for a phase 3 study for TH-302 in treating pancreatic cancer. It will be quite a while before results are available from either study.

Analysts surveyed by Thomson/First Call think Threshold's stock will rise to at least $10 per share and, perhaps, considerably more. The low end of their range calls for an increase of more than 140%. If they're right, Threshold is on the threshold of something big. For me, though, it's just too early to make that call.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.