Merrimack Pharmaceuticals, Inc. (MACK Quick QuoteMACK - Free Report) reported a loss of 40 cents per share in the second quarter of 2016, wider than the Zacks Consensus Estimate of 34 cents.

Quarter in Detail

Total revenue came in at $33.7 million, up from $21.3 million reported last quarter, and comfortably beat the Zacks Consensus Estimate of $26.1 million.

In Oct 2015, Merrimack Pharma’s first product, Onivyde, gained approval in the U.S., in combination with fluorouracil (5-FU) and leucovorin, for the treatment of patients suffering from metastatic adenocarcinoma of the pancreas, who were previously treated with Gemzar-based therapy. The drug was subsequently launched in the U.S. on Oct 26.

Further, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has given a positive opinion on the approval of Onivyde.

Onivyde sales in the reported quarter amounted to $12.9 million, up 29% sequentially. We note that the drug was added to the National Comprehensive Cancer Network (NCCN) 2016 Clinical Practice Guidelines in Oncology as a category I Treatment Option for patients with metastatic pancreatic adenocarcinoma who have previously been treated with Gemzar-based therapy.

Merrimack Pharma earned collaboration revenues of $19.3 million, up 70.9% sequentially.

Research and development expenses were $41 million, up 24.7%. General and administrative expenses were also up 16.2% to $20.7 million.

Pipeline Update

Currently, Merrimack Pharma is evaluating Onivyde in a phase II study for previously untreated front-line metastatic pancreatic cancer. Data from the phase II study are expected in 2017.

The company also initiated a phase I study on MM-151, in combination with Onivyde plus 5-FU and leucovorin, in patients with RAS wild-type metastatic colorectal cancer as well as a phase I study to evaluate the safety and tolerability of MM-151, in combination with seribantumab, in patients with heregulin-positive tumors. Apart from these studies, the company also commenced a trial on MM-151, in combination with MM-141, in patients with IGF-1-positive tumors, and in combination with a MEK inhibitor (trametinib) in patients with KRAS/NRAS-mutant tumors.

A phase II study, HERMIONE, on MM-302 for HER2-positive metastatic breast cancer is ongoing and results are expected in 2017. The trial is designed to support a potential accelerated approval application to the FDA. In addition, a phase II trial on MM-141 for the treatment of patients with front-line metastatic pancreatic cancer who have high serum levels of free IGF-1 is also ongoing and results are expected in 2018.

Outlook

The company anticipates research and development and selling, general and administrative expenses in the range of $243.5 million to $263.5 million in 2016, compared with its earlier projection of $263.5–$283.5 million.

Our Take

Merrimack Pharma reported a wider-than-expected loss in the second quarter as expenses continued to increase. Nevertheless, uptake of Onivyde has been strong and should boost the top line, going forward. Inclusion of the drug in the NCCN pathway should prove to be a big boost for the company and accelerate patient access to the drug.

Merrimack Pharma carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Actelion Ltd. , Agenus Inc. AGEN and Biogen Inc. BIIB. All the three stocks carry a Zacks Rank #2 (Buy).

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