Merrimack Q4 Loss in Line with Estimates, Revenues Miss
Merrimack Pharmaceuticals, Inc. MACK reported a loss of 41 cents per share in the fourth quarter of 2015, in line with the Zacks Consensus Estimate but wider than the year-ago loss of 9 cents.
Quarter in Detail
Total revenue of $21.4 million were down from $33.9 million in the year-ago quarter and missed the Zacks Consensus Estimate of $66 million.
In Oct 2015, Merrimack Pharma’s first product, Onivyde, gained approval in the U.S., in combination with fluorouracil (5-FU) and leucovorin, for the treatment of patients suffering from metastatic adenocarcinoma of the pancreas, who were previously treated with Gemzar-based therapy.
The drug was subsequently launched in the U.S. on Oct 26, 2015. Onivyde sales in the fourth quarter amounted to $4.3 million.
Merrimack Pharma earned collaboration revenues of $17.1 million, down 49.6% year over year due to the termination of the collaboration agreement with Sanofi SNY in Dec 2014.
Research and development expenses were $44.7 million, up 45.5% from the year-ago quarter. General and administrative expenses shot up 133.6% to $19.3 million primarily due to incremental expenses related to the launch of Onivyde.
Merrimack Pharma has a license and collaboration agreement with Baxalta Inc. BXLT for developing and commercializing Onivyde.
2015 Results
Revenues came in at $89.2 million, down 13.2% from 2014. Loss of $1.33 per share was also wider than both 2014 loss of 80 cents and the Zacks Consensus Estimate of $1.31.
Pipeline Update
Currently, Merrimack Pharma is evaluating Onivyde in a phase II study for previously untreated front-line metastatic pancreatic cancer. Data from the phase II study are expected in the first half of 2017.
The company has three other candidates in phase II studies – MM-121 for heregulin-positive, locally advanced or metastatic non-small cell lung cancer (results expected in 2018), MM-302 for the treatment of patients with HER2-positive metastatic breast cancer (results expected in 2017), and MM-141 for the treatment of patients with front-line metastatic pancreatic cancer who have high serum levels of free IGF-1 (results expected in 2017).
Outlook
Merrimack Pharma expects to receive $46.5 million as net milestones related to Onivyde from Baxalta in 2016. Operating expenses are projected between $225 million and $245 million.
Our Take
Merrimack Pharma’s loss in the fourth quarter was in line with estimates. The initial uptake of Onivyde is, however, encouraging. The company estimates that the target population for Onivyde is approximately 18,500 in the U.S.
Hence, Merrimack is expected to incur further expenditure related to the launch of Onivyde.
Merrimack Pharma carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Actelion Ltd. ALIOF, sporting a Zacks Rank #1 (Strong Buy).
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