Analyst Conference Summary


Merrimack Pharmaceuticals

conference date: May 2, 2016 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2016 (Q1, first quarter 2016)

Forward-looking statements

Overview: Onivyde revenue more than doubled over Q4. Still has a lot of ramping to do to get Merrimack in the black.

Basic data (GAAP):

Revenue was $21.3 million, about flat sequentially from $21.4 million, and up 44% from $14.8 million in the year-earlier quarter.

Net income was negative $38.5 million, up sequentially from negative $48.1 million, and down from negative $34.7 million year-earlier.

EPS was negative $0.33, down sequentially from negative $0.41 and down from negative $0.32 year-earlier.


Reiterated 2016 guidance. Expects $46.5 million Onivyde milestone payments. No prediction of product revenue. Operating expenses ranging from $225 to $245 million.

Conference Highlights:

The FDA approved ONIVYDE™ (irinotecan liposome injection) (formerly MM-398) for post-gemcitibine metastatic pancreatic cancer on October 22, 2015.

Onivyde product revenue was $10.0 million, up 133% sequentially from $4.3 million. License and collaboration revenue was $11.3 million, down sequentially from $17.1 million due to the timing of work performed under the Baxalta collaboration.

Onivyde was added to the NCCN guidelines. Awareness of Onivyde among oncologists has grown significantly. Believes there is a need for post-gemcitabine pancreatic cancer therapy, and Onivyde is not the recommended choice. Sites using Onivyde grew during the quarter. Feedback on reimbursement has been positive.

A Phase 2 clinical trial of Onivyde for front-line metastatic pancreatic cancer enrolled its first patient. A total of 5 cancer types will be targeted by Baxalta and Merrimack with Onivyde in the next round of trials. Results should be announced in 2018.

HERMIONE Phase 2 trial for MM-302 for third line HER-2 positive breast cancer continued, in combination with herceptin. This is an antibody directed nanotherapy. Enrollment should complete in 2016 with data in 2017.

MM-121 Phase 2 trial in non-small cell lung cancer who are heregulin positive also continues to enroll. Amended the primary endpoint to overall survival. Data should report in the second half of 2016. Seeing strong interest from potential partners in collaborating in MM-121 for breast cancer. FDA agreed that the single study could be sufficient to approve the drug. A partnership with Leica Biosystems to develop Merrimack's novel heregulin assay for seribantumab (MM-121).

An MM-141 Phase 2 clinical trial in 2015 for frontline pancreatic cancer who have high serum IGF-1 levels, in combination with existing therapies, continues. The safety portion has been completed. MM-141 is believed to sensitize tumors to the nab-paclitaxel and gemcitabine combination. Only 146 biomarker positive patients will be enrolled. Results could be available in 2018.

Discussed the potential development of MM-310, a novel antibody directed nanotherapy.

See also the Merrimack Pipeline.

Cash and equivalents ended at $132.4 million, down sequentially from $185.6 million. Lists $410 million in total liabilities. Cash used in operating activities was $53.5 million. After the quarter ended issued 12.4 million shares to close $64 million of convertible notes, which will lower future interest payments by about $13 million.

Costs and expenses were $51.4 million, consisting of: $0.7 million cost of goods sold, $32.9 million for R&D; and $17.8 million for selling, general and administrative expenses. Operating profit was negative $30.1 million. Other expenses were $8.5 million. Loss attributed to non-controlling interest was $0.2 million.

There will be an analyst day on May 19.


Long term gross to net and inventories? We are estimated 10% to 15% discounts. Inventory was 12 days at the end of the quarter, flat vs. last quarter.

Increased cycles per patient, current duration? It is too early to report on duration. We are educating on the napoli data, which has been well received by oncologists.

Any barriers to penetration? When physicians understand the data we see them prescribe the product. We are working to remove barriers like formulary approvals.

NCCN recommendation as % of market? It is about 30 academic centers around the country. There are about 250 total sites around the country we are working on. The NCCN guidelines are influential outside of their own centers.

MM-121 target label? Confirmed single study can be basis of approval. We could also extend the study to broaden the population treatable.

Does fiscal discipline include canceling or pausing trials? No. We are driving internal efficiencies.

IMF reported revenues of $12.5 million in the quarter? It is just variability in the projection. We don't have insight into their estimates.

April use of Onivyde? We don't have that available.

There were some first-line patients in the napoli study, and we are getting feedback that use is consistent with the napoli study.

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2016 William P. Meyers