Merrimack Pharmaceuticals' Q2 Loss Wider, Revenues Up - Analyst Blog
Merrimack Pharmaceuticals, Inc. MACK reported a loss of 21 cents per share in the second quarter of 2015, narrower than the Zacks Consensus Estimate of a loss of 28 cents, but wider than the year-ago loss of 17 cents.
Merrimack Pharmaceuticals Inc. - Earnings Surprise | FindTheBest
Merrimack Pharma earned collaboration revenues of $36.6 million, up 31.4% year over year and surpassed the Zacks Consensus Estimate of $25 million. The increase reflected revenues ($36.6 million) earned by the company from its collaboration with Baxalta Inc. BXLT during the second quarter of 2015, including a $20 million non-recurring revenue recognized upon the achievement of a milestone when the European Medicines Agency (EMA) accepted MM-398 for review.
In the reported quarter, research and development expenses were $42.8 million, up 26.7% from the year-ago quarter. The increase reflected higher expenses related to pipeline development. General and administrative expenses increased 55.5% from the year-ago quarter to $12.3 million primarily driven by higher facility-related costs and costs related to preparation for the potential commercialization of MM-398.
Pipeline Update
Merrimack Pharma’s MM-398 is under priority review in the U.S. for the treatment of patients suffering from metastatic adenocarcinoma of the pancreas, who had previously been treated with Gemzar-based therapy. A response from the FDA is expected by Oct 24. MM-398 is also under review in the EU for the same indication.
Additionally, Merrimack Pharma is developing MM-398 for glioma and metastatic breast cancer. The company further intends to study MM-398 for additional indications – front-line metastatic pancreatic cancer and front-line HER2-negative gastric cancer. Moreover, Merrimack Pharma is planning to study MM-151 for EGFR-positive colorectal cancer.
Meanwhile, the phase II studies on MM-302 (HER2-positive metastatic breast cancer), MM-121 (heregulin-positive, locally advanced or metastatic non-small cell lung cancer) and MM-141 (front-line metastatic pancreatic cancer in patients with high serum levels of free IGF-1) are also in sync with the company’s schedule.
2015 Outlook
Merrimack Pharma expects its existing unrestricted cash and cash equivalents, available-for-sale securities (as of Jun 30, 2015) and anticipated cost sharing reimbursements and milestone payments (anticipated receipt of $51.5 million) from Baxalta to be sufficient for funding its operations into 2016. Additional payments from business developments such as Merrimack’s at-the-market offering program, business development, sales of MM-398 (if approved) and additional net milestones related to MM-398 receivable in 2016, should extend the company’s cash runway.
Our Take
Merrimack Pharma’s second-quarter 2015 results were encouraging. Although the company’s efforts to get MM-398 approved in the U.S. are commendable, we note that the company is highly dependent on this single regulatory-phase candidate for growth. With an important regulatory event scheduled later this year, we expect investor focus to remain on regulatory update from the company.
Merrimack Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Corcept Therapeutics Incorporated CORT and Actelion Ltd. ALIOF. While Corcept carries a Zacks Rank #1 (Strong Buy), Actelion holds a Zacks Rank #2 (Buy).
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