As many of you know already, over 80 million shares that had been restricted from trading for six months post IPO hit the market all at once yesterday.
Many shareholders of those 80M shares had made their investments as long as ten years ago so it isn't surprising that they took some money off the table. Most of us who held the restricted stock expected a drop this week, so this price action is nothing unexpected.
It will take a few more days for the dust to settle and the price to stabilize. Some institutions were not able to buy Merrimack stock previously because of the small float and it will be interesting to see when they enter the picture. So, just so it's clear, this movement is nothing more than an adjustment to a vast increase in liquidity and does not reflect any underlying issue with the company.
The next important 'milestone' for Merrimack will be in a week or so when the Phase I results for two of their lead products are announced at the European Society of Medical Oncology conference. The key piece of data will be to look for signs of efficacy for two of their proprietary drugs which are being used against cancers that have failed multiple prior treatments. That is a real test for Merrimack, and what you are seeing now is just long term holders getting a bit of cash and the shorts taking advantage of it.
Your comments are helpful. As a 13 year former CEO of a technology company, I can echo sentiment that selling does not necessarily represent any lack of confidence in the company but rather the desire to realize insider liquidity. Two key questions: Can the market absorb an increase in tradable shares of 14.3 million to 78.1 million without triggering a precipitous drop in share price; Will company performance against milestones be sufficient to offset the share float overhang?
I agree, lots of overhang now and still significant cash burn. Still am not buying the manipulation that happened the week before lock up to run this up 30% on low volume. Utter and complete orchestration in order to avoid a travesty. Think about it, who was willing to step in and buy at 10.50 - 11.11 all the while knowing this event was going to happen?
Anyway the mechanics of fear and greed won't be repealed as more insiders get the itch to take their share.