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Merrimack (MACK) Stock Up Year to Date: Is a Rebound Likely?

Zacks Equity Research

Shares of Merrimack Pharmaceuticals, Inc. MACK are recovering this year after a massive fall and a sharp decline in 2018. The biotech stock has jumped 48.7% this year so far, outperforming the industry’s rise of 8.2%.

Merrimack suffered a string of pipeline setbacks in 2018 when it decided to stall the development of MM-141 following dismal results from the phase II study. The company also stopped developing another candidate, MM-121, evaluated in two phase II programs. Merrimack is now focused on the successful development of its only candidate, MM-310, which is in phase I analysis for solid tumors.

Though 2018 turned out to be a dismal year for Merrimack, it looks as if the worst is over for the company as is indicated by its stock price recovery.

Merrimack sold its only marketed product, Onivyde, to Ipsen in 2017 and was back to being a development-stage biopharmaceutical company. The sale of Onivyde is beneficial to the company, given the fact that it was struggling to market the drug properly. The cash received from Ipsen was utilized to pay the company’s huge debt and return value to its shareholders in the form of dividends. The sale proceeds also come in as the company’s much-needed capital to focus on its streamlined oncology pipeline.

Last September, the company announced that it secured a $5-million milestone payment from Shire (now part of Takeda) following the sale of Onivyde in the first major non-European and non-Asian country in accordance with the terms of asset sale to Ipsen in 2017. Merrimack is eligible to further receive an aggregate of $450 million as milestones from Ipsen, subject to stockholders’ approval.

Notably, Merrimack is planning to lay off 60% of workforce as part of its corporate restructuring plan post which, the company expects to have approximately 27 employees on its payroll. This reduction in headcount is expected to be completed by February 2019. Going forward, this is likely to help the company in cost savings and focus on its pipeline development.

Merrimack now concentrates on developing its only pipeline candidate, MM-310 (solid tumor). A phase I evaluation of MM-310 is currently under way to assess the candidate’s safety in patients suffering solid tumors and to identify its maximum tolerated dose. However, after treating the first 14 patients in the dose escalation program, the study has been amended to test an alternative dosing schedule.

The company plans to report safety data from the examination in the first quarter of 2019, which could be a major catalyst for the stock. If the data is positive, the stock’s upward swing could continue while unfavorable data can significantly hit the stock’s price.

Merrimack also sets sights on developing its two preclinical candidates — an immuno-oncology program, MM-401 (an agonistic antibody targeting a novel immuno-oncology target, TNFR2), and MM-201 (a highly stabilized agonist-Fc fusion protein targeting death receptors 4 and 5).

Merrimack Pharmaceuticals, Inc. Price

Merrimack Pharmaceuticals, Inc. Price | Merrimack Pharmaceuticals, Inc. Quote

Zacks Rank & Stocks to Consider

Merrimack currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biotech sector include Celgene Corporation CELG, Ligand Pharmaceuticals Incorporated LGND and Aduro Biotech, Inc. ADRO. While Celgene and Ligand sport a Zacks Rank #1 (Strong Buy), Aduro carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings estimates have been revised 4.7% upward for 2019 over the past 60 days. The stock has surged 37.2% so far this year.

Ligand’s earnings estimates have moved 2.9% north for 2019 over the past 60 days.

Aduro’s loss per share estimates have been narrowed 35.1% for 2019 in the last 60 days. The stock has rallied 26.9% so far this year.

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