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Merrimack (MACK) Suffers Wider-Than-Expected Loss in Q3

Zacks Equity Research

Merrimack Pharmaceuticals, Inc. MACK incurred a loss of 92 cents per share for the third quarter of 2018, significantly wider than the Zacks Consensus Estimate of a loss of 27 cents and the year-ago quarter’s loss of 40 cents.

Last year, Merrimack sold its only marketed product, Onivyde, to Ipsen. The company could not generate any revenues in the reported quarter due to absence of a marketed product in its portfolio.

Shares of Merrimack were down more than 4% following its release of third-quarter results on Nov 7. In fact, the stock has plunged 55.7% so far this year, wider than the industry’s decline of 14.1%.

In the quarter under review, research and development expenses decreased 4.4% year over year to $13 million owing to the phasing of clinical studies.

General and administrative expenses increased 11.8% year over year to $3.8 million on external corporate expenses.

Merrimack is planning to layoff workforce by 60% as part of its corporate restructuring plan.

Pipeline Update

With the sale of Onivyde, Merrimack is back to being a development-stage biopharmaceutical company.

In October 2018, Merrimack decided to discontinue its phase II SHERLOC study on MM-121 as it was rendered futile. The study evaluated MM-121 in combination with Taxotere (docetaxel) and failed to improve progression free survival in patients diagnosed as heregulin positive NSCLC. MM-121, combined with Sanofi’s SNY Taxotere, was examined in the phase II SHERLOC analysis for the treatment of non-small cell lung cancer.

Following disappointing results from the SHERLOC study, Merrimack decided to discontinue the other phase II SHERBOC program on MM-121. The candidate was assessed along with AstraZeneca’s AZN Faslodex on patients afflicted with HER2 negative hormone receptor and heregulin positive postmenopausal metastatic breast cancer.

We remind investors that in June 2018, Merrimack stopped developing MM-141 post witnessing disappointing results from its phase II study, CARRIE, for the treatment of front-line metastatic pancreatic cancer.

Merrimack now focuses on developing its only pipeline candidate, MM-310 (solid tumor). A phase I study on MM-310 is under way to evaluate the candidate’s safety in patients with solid tumors as well as 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 study in the first quarter of 2019. Earlier, it was expected by this year-end.

Merrimack intends to advance 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).


The company had cash, cash equivalents and marketable securities of $84.8 million as of Sep 30, 2018. It received an additional $18-million milestone payment from Shire SHPG on the sale of Onivyde in two major European countries during August 2018.

In September, the company announced that it has secured a $5-million milestone from Shire 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 receive an aggregate of $450 million as milestone payments from Ipsen, subject to stockholders’ approval.

Our Take

Merrimack’s portfolio is still devoid of an approved product. The recent pipeline setbacks have further clouded the company’s growth prospects.

Merrimack Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

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

Zacks Rank

Merrimack currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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