Analyst Conference Summary


Merrimack Pharmaceuticals

conference date: November 8, 2017 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2017 (Q3, third quarter 2017)

Forward-looking statements

Overview: Looking forward to clinical data results for three drug candidates.

Basic data (GAAP):

Revenue was $0.0 million, down sequentially from $0.0 million and down from $0.0 million year-earlier.

Net income from continuing operations was $3.1 million, up sequentially from negative $29.6 million, and up from negative $30.1 million year-earlier. .

EPS was $0.24, up sequentially from negative $0.23 and up from negative $2.33 year-earlier.


Current cash and anticipated milestone payments should be sufficient into 2H 2019.

Conference Highlights:

Richard Peters, CEO, said "The third quarter marked continued execution on our 2017 goals as we delivered on the promise of a refocused Merrimack with a seasoned team built around our efficient, biomarker-driven approach and refined corporate strategy. With the potential to emerge from the fourth quarter with a clean balance sheet and three upcoming data readouts from our lead clinical candidates, MM-121, MM-141 and MM-310, we look towards 2018 with great anticipation and are poised to deliver on our corporate goals with a strong infrastructure and disciplined approach."

Hired Jean Franchi as CFO and Thomas Needham as Chief Business Officer.

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. It could also generate milestone payments from Ipsen if results are positive.

MM-121 (seribantumab) Phase 2 trial (SHERLOC) in non-small cell lung cancer who are heregulin positive continued, with data due in 2H 2018. Retooled the trial into a proof of concept study with a top-line readout in 2H 2018. Received orphan drug designation from the FDA.

Merrimack plans to initiate this year a Phase 2 trial (SHERBOC) of MM-121 plus standard of care (sylvestran) for heregulin positive, hormone receptor positive, HER2 negative breast cancer.

An MM-141 Phase 2 clinical trial completed enrollment in June for frontline pancreatic cancer who have high serum IGF-1 levels, in combination with existing therapies. Blocks two upstream redundant pathways. Expects topline results in first half of 2018 with progression free survival as the primary endpoint. About 50% of pancreatic cancers display high IGF-1.

MM-310 is an antibody directed nanoliposome targeting 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 2H 2018. Believes will reduce toxicity.

Merrimack has other compounds in preclinical development. It is a biomarker-driven approach.

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

See also the Merrimack Pipeline.

In October settled the Ipsen litigation (triggered by the Ipsen purchase of Onivyde, but not vs. Ipsen), agreeing to pay $0.90 per $1.00 of 4.5% convertible notes plus interest and legal fees. Also is tendering for all remaining notes at the $0.90 rate. Total cost $60 million. Could eliminate all remaining debt.

Cash and equivalents ended at $107.2 million, down sequentially from $135.5 million. Partly this was due to discontinuation of Silver Creek consolidation. Does not expect this cash burn rate to continue going forward.

Costs and expenses were $17.0 million, consisting of: $0.0 million cost of goods sold, $13.6 million for R&D; and $3.4 million for selling, general and administrative expense. Operating profit was negative $17.0 million. Other expenses (mainly interest) were $1.4 million. Gain (non-cash) on consolidation of Silver Creek $10.8 million. Income tax benefit $2.1 million. Net loss from continuing operations was $5.4 million, while the gain from discontinued operations was $8.5 million.


Next Shire milestones? Listed as $18 million for Onivyde sale in 2 major European countries; $5 million for first non-European non-asian country; $10 million for first patient dosed in a new clinical indication. To be prudent we have included part of these milestones in our cash runway guidance, but are not disclosing the specifics.

Discontinued operations in cash burn? In Q3 there are estimated tax payments and Silver Creek cash burn that should not be present, or should be very modest, going forward.

310 specifics? It is a multiple ascending dose study, in cohorts. 310 is meant to be less toxic than docetaxel, which would allow for more steady release. It also has an antibody to deliver to tumors with EphA2 receptors.

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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