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Merrimack Pharma (MACK) Misses Q3 EPS by 65c, Initiate Corporate Restructuring

November 7, 2018 6:51 AM EST

Merrimack Pharma (NASDAQ: MACK) reported Q3 EPS of ($0.92), $0.65 worse than the analyst estimate of ($0.27).

Strategic Update

The Company conducted an internal review of its pipeline, the results of which are outlined below:

  • Corporate: Reflective of its updated development plans, Merrimack is initiating a corporate restructuring intended to maximize value and preserve its ability to capture outstanding milestones from Ipsen, which the Company intends to pass through to shareholders, net of any taxes owed and subject to there being sufficient surplus at that time. This restructuring includes a workforce reduction of approximately 60%, including the elimination of all open positions, to be initiated immediately and completed by February 2019. This restructuring, together with other restructuring and cost cutting measures that the Company could implement in the future, provide the Company with the potential to extend its cash runway into at least the second half of 2022. In parallel, Merrimack has retained external advisors to explore strategic alternatives.
  • MM-121: Based on the results of the interim analysis of its randomized Phase 2 SHERLOC study that were announced on October 19, 2018, Merrimack is discontinuing development of all ongoing MM-121 programs, including terminating the SHERBOC study, its companion Phase 2 clinical trial evaluating MM-121 in metastatic breast cancer.
  • MM-310: After treating the first 14 patients in the first dose-escalating regimen in Merrimack's Phase 1 clinical trial of MM-310 in solid tumors, the study has been amended to test an alternative dosing schedule. Early data from the every three week dosing schedule regimen showed signs of encouraging antitumor activity in four patients, including two non-small cell lung cancer patients, one soft tissue sarcoma patient and one ovarian cancer patient who additionally had a 70% reduction of CA-125, an associated tumor marker. However, emerging cumulative grade 3 peripheral neuropathy following multiple cycles of treatment was observed in three patients. Pharmacokinetic and preclinical data indicate that lengthening the time between dosing may improve tolerability of MM-310. Patients are now being screened under an every four week schedule amendment and will be dosed starting at the highest dose level reached in the prior regimen. Merrimack plans to provide an additional safety update from the study in Q1 2019.
  • Preclinical Programs: Merrimack is narrowing the scope of its preclinical efforts to prudently advance its two most promising programs, which are MM-401, its previously undisclosed immuno-oncology program, an agonistic antibody targeting a novel immuno-oncology target, TNFR2, and MM-201, a highly stabilized agonist-Fc fusion protein targeting death receptors 4 and 5. The Company will feature data from the MM-401 program at the 30th EORTC-NCI-AACR Symposium on November 14, 2018 in a poster titled, "Targeting TNFR2 – A Key Regulator of the Tumor Immunosuppressive Microenvironment," which highlights robust responses to MM-401 as a monotherapy in multiple mouse tumor models, including in PD-1 antibody-resistant tumors, as well as in combination with checkpoint inhibition.

Financial Outlook

As a result of the corporate restructuring, Merrimack believes that its cash, cash equivalents and marketable securities of $84.8 million as of September 30, 2018, plus the $5.0 million ONIVYDE milestone received in October but excluding any potential additional milestone payments, together with other restructuring and cost cutting measures that Merrimack could implement in the future, provide Merrimack with the potential to fund its operations into at least the second half of 2022.

Merrimack remains eligible to receive additional milestone payments resulting from the Company's asset sale to Ipsen in 2017:

  • Merrimack is entitled to receive up to $5.0 million in milestone payments triggered by Ipsen's and Servier's decision to progress their ongoing multi-part clinical trial evaluating ONIVYDE in SCLC into the randomized part of the study focused on efficacy. This milestone payment is excluded from the Company's cash runway guidance until achieved; and
  • Merrimack is entitled to receive an aggregate of $450.0 million in regulatory-based milestones from Ipsen, which Merrimack has said it expects to pass through to stockholders, net of any taxes owed and subject to there being sufficient surplus at that time, consisting of:
  • $225.0 million upon approval by the FDA of ONIVYDE for the first-line treatment of metastatic adenocarcinoma of the pancreas, subject to certain conditions;
  • $150.0 million upon approval by the FDA of ONIVYDE for the treatment of small cell lung cancer after failure of first-line chemotherapy; and
  • $75.0 million upon approval by the FDA of ONIVYDE for an additional indication unrelated to those described above.

For earnings history and earnings-related data on Merrimack Pharma (MACK) click here.



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