Analyst Conference Summary


Merrimack Pharmaceuticals

conference date: May 10, 2017 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2017 (Q1, First quarter 2017)

Forward-looking statements

Overview: selling Onivyde means a lot depends on the narrower, 3-candidate clinical pipeline going forward.

Basic data (GAAP):

Revenue was $0.0 million, down sequentially from $61.2 million. This was due to classifying Onivyde revenue in discontinued operations.

Net income was negative $29.7 million, up sequentially from negative $32.4 million, but up from negative $38.5 million year-earlier.

EPS was negative $0.23, up sequentially from negative $0.25 and up from negative $0.33 year-earlier.


Cash is expected to fund operations until the second half of 2019.

Conference Highlights:

Richard Peters, the new CEO, said "The first quarter of 2017 was transformative for Merrimack. Following our pipeline prioritization and the strategic review of our business, we emerged with clear priorities as a refocused research and clinical development company. We outlined three programs - MM-121, MM-141 and MM-310 - as the most promising clinical programs on which we will focus our development efforts going forward."

Merrimack sold Onivyde and its generic version of doxorubicin hydrochloride liposome injection to Ipsen S.A. for up to $1.025 billion, plus a possible $33 million milestone payment. The $1.025 billion figure would only be if Onivyde achieves specified label expansions. The immediate cash price was $575 million.

A special dividend of $140 million will be payable to shareholders on May 26, 2017. Number of shares, end of quarter, was 130,588,000. Estimated at $1.06 per share.

Although not reported as revenue, Onivyde sales in the quarter were $16.1 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.

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

MM-121 (seribantumab) Phase 2 trial in non-small cell lung cancer who are heregulin positive continued. Will retool the trial into a proof of concept study with a top-line readout in 2018. Will start a study in HER2 negative metastatic breast cancer this year for patients who failed 2 prior lines of therapy, with progression free survival as the primary endpoint.

An MM-141 Phase 2 clinical trial continued for frontline pancreatic cancer who have high serum IGF-1 levels, in combination with existing therapies. Blocks two upstream redundant pathways. Retooling into a randomized proof of concept trial with results in 2018 with progression free survival as the primary endpoint.

MM-310 is an antibody directed nanoliposome targetting the EphA2 receptor, which is present in many major tumor types. Delivers docetaxel as a prodrug. Initiated the Phase 1 trial in a variety of solid tumors with a dosing schedule result expected in 2018. Believes will reduce toxicity.

Merrimack plans to seek partners for the development of its therapies once proof-of-concept has been established.

See also the Merrimack Pipeline.

Cash and equivalents ended at $17.2 million, down sequentially from $21.5 million. Lists $345 million in total liabilities. The cash from the Ipsen deal was received on April 3. That was used to redeem $175 million of senior notes due in 2022.

Costs and expenses were $27.2 million, consisting of: $0.0 million cost of goods sold, $21.6 million for R&D; and $5.6 million for selling, general and administrative expense. Operating profit was negative $27.2 million. Other expenses were $2 million. Loss attributed to non-controlling interest was $0.5 million.


MM-121 in lung cancer timeline, threshold for moving forward? It is a robust proof of concept study, double-blind and randomized, added to the standard of care. Enrollment continues and investigator feedback is enthusiastic about the decision to narrow the population tested. The threshold is Progression Free Surivival of 5 months for the combination arm.

310 expansion phase, what drug combinations will you use? First we will establish safety. We will try as a single agent before deciding on combination partners.

310 tumor types? The payload is broadly used, so we hope 310 will just be more effective, but still as broadly applicable.

Heregulin expression in lung cancer? We are targetting HER3, which we intend to block, but patients also have high heregulin expression. We previously found this type of patient has a high benefit. We are also narrowing to adenocarcinoma. We believe we have a deep understanding of this cancer pathway. Our studies indicate about 50% of patients have high expression of heregulin in their tumor cells.

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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 2017 William P. Meyers