Analyst Conference Summary


Merrimack Pharmaceuticals

conference date: November 9, 2016 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2016 (Q3, third quarter 2016)

Forward-looking statements

Overview: Onivyde revenue ramping off small base, but total revenue down due to lower licensing and collaboration revenue. Otherwise waiting for the pipeline to mature.

Basic data (GAAP):

Revenue was $28.1 million, down 17% sequentially from $33.7 million, but up 71% from $16.4 million in the year-earlier quarter.

Net income was negative $30.1 million, up sequentially from negative $50.8 million, and up from negative $42.4 million year-earlier.

EPS was negative $0.23, up sequentially from negative $0.40 and up from negative $0.38 year-earlier.


For full year 2016 expense guidance was lowered and narrowed to GAAP $235.5 to $245.5 million, non-GAAP 200.0 to $210.0 million. Only $4.5 million in milestones will be achieved in 2016.

In 2017 $42 milion in net milestones should be achieved in the first half. GAAP operating expenses estimated at $193 million GAAP or $165 million non-GAAP.

Cash, including from expected milestones, should be sufficient "into 2018."

Conference Highlights:

Gary Crocker, interim CEO, said the focus is on building shareholder value. It requires discipline. Some pipeline programs may be trimmed or postponed, and new more effective programs could be added. Will inform investors about decisions about the pipeline. Looking for a new CEO.

Onivyde™ (irinotecan liposome injection) (formerly MM-398) for post-gemcitibine metastatic pancreatic cancer was given a European marketing authorization for treatment of patients with metastatic adenocarcinoma of the pancreas following gemcitabine-based therapy. Shire is the partner in Europe that made the application; royalties should increase over time. Also established a dose for Onivyde in combination with 5-FU/LV and oxaliplatin in an ongoing study evaluating its use in patients with previously untreated metastatic pancreatic cancer.

Onivyde product revenue was $14.5 million, up 12% sequentially from $12.9 million. Much use is of later line therapy, trying to move up to standard for second line therapy. Time on therapy has been increasing. The $14.5 million was net; the gross revenue was $16.8 million. Believes end user demand grew faster than revenue. Believes 2,400 patient starts in first 3 quarters. Duration on therapy has been growing, believes will eventually hit 15 weeks.

License and collaboration revenue was $12.4 million, down sequentially from $19.3 million. Other revenue was $1.2 million.

A Phase 2 clinical trial of Onivyde for front-line metastatic pancreatic cancer continued enrollment. This could address 46,000 patients annually in the U.S. A total of 5 cancer types will be targeted by Shire and Merrimack with Onivyde in the next round of trials. Results should be announced in 2018. Working with Shire to test Onivyde in second line non-small cell lung cancer, compared to the current standard of care, topotecan.

In October Merrimack announced a 22% reduction in its workforce to prioritize its pipeline efforts.

An Abbreviated New Drug Application (ANDA) was filed by Actavis LLC for generic doxorubicin hydrochloride liposome injection (Doxil®). This is the first product developed by Merrimack under a development, license and supply agreement with Actavis pursuant to which Merrimack is responsible for the development and commercial supply of bulk drug product. If the product is approved, Merrimack is eligible to receive a percentage share of net profits in the mid-twenties

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 (seribantumab) 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. Has Fast Track designation.

An MM-141 Phase 2 clinical trial continued 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.

Merrimack continued a biomarker-selected, multi-arm Phase 1 clinical study in metastatic colorectal, non-small cell lung, and head and neck cancers to evaluate the safety and tolerability of MM-151 in combination with seribantumab in patients with heregulin positive tumors, MM-151 in combination with MM-141 in patients with IGF-1-positive tumors, and MM-151 in combination with a MEK inhibitor (trametinib) in patients with KRAS/NRAS-mutant tumors. At ASCO the final analysis from the Phase 1 clinical study of MM-151 showed clinical activity in multiple solid tumor types, including colorectal cancer.

See also the Merrimack Pipeline.

Cash and equivalents ended at $48.5 million, down sequentially from $82.7 million. Mentioned $22 million in accounts receivable, and is managing that downward. Lists $346 million in total liabilities. Cash used in operating activities was $34.9 million.

Costs and expenses were $52.0 million, consisting of: $1.0 million cost of goods sold, $32.1 million for R&D; and $18.0 million for selling, general and administrative expenses, and $0.8 million for restructuring. Operating profit was negative $23.9 million. Other expenses were $6.4 million. Loss attributed to non-controlling interest was $0.2 million.


Will not be taking clinical questions on the call because of the pipeline review.

Frontline pancreatic study, toxicity profile you are trying to avoid? The comp, 5-FU/LV and oxaliplatin, is pretty toxic, is used only on the healthiest patients, but it can be effective, so we are aiming to get the effectiveness while lowering the toxicity.

Pricing ex-U.S.? Pricing is a Shire decision ex-U.S. We cannot comment. They are working diligently to commercialize now that they have the approval.

Onivyde uptake, is it mainly from time on the market? NCCN endorsement and Napoli data are helping, and there is a discussion around sequencing. We have also been building our sales team and prioritizing accounts.

Patients in Phase 1 portion of frontline pancreatic study? We are not ready to announce the dosing or number of patients yet.

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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