Merrimack Pharmaceuticals' Q1 Loss Wider Than Expected - Analyst Blog
Merrimack Pharmaceuticals, Inc. MACK reported a loss of 32 cents per share in the first quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 30 cents and the year-ago loss of 27 cents.
Merrimack Pharmaceuticals Inc. - Earnings Surprise | FindTheCompany
Merrimack Pharma earned collaboration revenues of $14.8 million, up 13.9% year over year, but missing the Zacks Consensus Estimate of $15 million. The increase in collaboration revenues was primarily due to revenues earned under the company’s collaboration with Baxter International BAX for the development and commercialization of MM-398. However, this increase was partially offset by a decline in revenues due to the termination of Merrimack Pharma’s collaboration with Sanofi SNY effective Dec 17, 2014.
In the first quarter of 2015, research and development expenses were $35.7 million, up 17.7% from the year-ago quarter. The increase was primarily due to pipeline development, and pre-clinical and other general expenses. General and administrative expenses increased 47.6% from the year-ago quarter to $9.2 million primarily driven by interest expenses.
Pipeline Update
During the first quarter, Merrimack Pharma initiated a randomized, double-blinded, placebo-controlled phase II study on MM-141 in combination with nab-paclitaxel and Gemzar, versus nab-paclitaxel and Gemzar, for the treatment of front-line metastatic pancreatic cancer patients with high serum levels of free IGF-1.
In Apr 2015, Merrimack Pharma completed the rolling submission of a new drug application for its lead candidate MM-398 to the FDA for the treatment of patients with metastatic adenocarcinoma of the pancreas who received prior treatment with Gemzar. Additionally, in May 2015, Baxter submitted a marketing authorisation application to the European Medicines Agency for the approval of MM-398 in the same indication. The company is also planning to commence studies on MM-398 for front-line metastatic pancreatic cancer and front-line HER2-negative gastric cancer in 2015.
Meanwhile, patient enrollment is ongoing in two studies – the phase II HERMIONE study on MM-302 designed to support a potential accelerated approval application to the FDA for the treatment of HER2-positive metastatic breast cancer and a phase II study on MM-121 for heregulin-positive, locally-advanced or metastatic non-small cell lung cancer.
2015 Outlook
Merrimack Pharma expects that its existing unrestricted cash and cash equivalents, available-for-sale securities (as of Mar 31, 2015) and anticipated cost sharing reimbursements and milestone payments (anticipated receipt of $66.5 million) from Baxter will be sufficient for funding its operations into 2016. Additional payments from additional business development should extend the company’s cash runway.
Our Take
Merrimack Pharma’s first-quarter 2015 earnings were disappointing with the company missing on both the top and bottom lines. Currently, Merrimack Pharma is highly dependent on its only regulatory-phase candidate, MM-398. We expect investor focus to remain on updates from the company regarding the candidate’s regulatory status.
Merrimack Pharma carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Horizon Pharma plc HZNP, carrying a Zacks Rank #1 (Strong Buy).
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