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What's in the Cards for Merrimack (MACK) in Q1 Earnings?

Zacks Equity Research

Merrimack Pharmaceuticals, Inc. MACK is scheduled to report first-quarter 2018 results on May 8, before market open. Last quarter, Merrimack beat bottom-line expectations by 29.92%.

Merrimack’s shares have declined 12.8% so far this year compared with the industry’s decline of 10.8%.

Let’s see how things are shaping up for the company this quarter.

Factors to Consider

Merrimack divested its only marketed product, Onivyde, last year to Ipsen due to a disappointing launch and subsequent unimpressive sales. The company received $575 million in cash from the asset sale

Merrimack is also entitled to receive up to $450 million in additional regulatory approval-based milestone payments as part of the deal.

The company lowered debt and invested in the development of its oncology pipeline.

However, the company is back to being a developmental stage company and hence investors will focus on pipeline updates. Merrimack is now focused on the development of three pipeline candidates — MM-121/seribantumab, MM-141/istiratumab and MM-310 (solid tumor).

A phase II study, CARRIE, is evaluating MM-141 in metastatic pancreatic cancer. The company expects to report data in the first half of 2018. Moreover, MM-121 is currently being evaluated in two phase II studies. A phase I study on MM-310 is ongoing with data expected in the second half of 2018.

During the quarter, the company increased the patient population in the phase II SHERLOC study from 80 to 100, evaluating MM-121 in advanced non-small cell lung cancer patients who are heregulin positive. Top-line data is expected in the second half of 2018.

Merrimack initiated dosing in phase II SHERBOC study in February evaluating MM-121 in breast cancer.

The company may issue a preliminary update related to studies on the first-quarter earnings call.

Surprise History

Merrimack’s track record has been mixed so far. The company missed estimates in two of the trailing four quarters while beating the same twice. Merrimack has a four-quarter average negative earnings surprise of 40.7%.

Earnings Whispers

Our proven model does not conclusively show that Merrimack is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $1.28. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Merrimack’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Merrimack Pharmaceuticals, Inc. Price and EPS Surprise


Merrimack Pharmaceuticals, Inc. Price and EPS Surprise | Merrimack Pharmaceuticals, Inc. Quote

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Aptevo Therapeutics Inc. APVO has an Earnings ESP of +36.94% and a Zacks Rank #3.  The company is expected to release first-quarter results on May 11. You can see the complete list of today’s Zacks #1 Rank stocks here.

Array BioPharma Inc. ARRY has an Earnings ESP of +21.19% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 9.

Adverum Biotechnologies, Inc. ADVM has an Earnings ESP of +6.9% and currently carries a Zacks Rank #3. The company is expected to release first-quarter results on May 8.

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Merrimack Pharmaceuticals, Inc. (MACK) : Free Stock Analysis Report
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