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Merrimack (MACK) Q1 Loss Wider than Expected, Sells Onivyde
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Merrimack Pharmaceuticals, Inc. (MACK - Free Report) reported a loss of 22 cents per share in the first quarter of 2017, wider than the Zacks Consensus Estimate of a loss of 7 cents. The company had reported a loss of 32 cents in the year-ago quarter.
Merrimack sold its only marketed product, Onivyde, to Ipsen in Jan 2017 through a definitive asset purchase and sale agreement for $1 billion. Merrimack did not record any revenues in the quarter as there was no marketed product. The consensus estimate for revenues was $34.8 million.
Merrimack’s shares gained 5.9% following the release of its first-quarter results. However, shares of Merrimack have underperformed the Zacks classified Medical Biomed/Genetics industry so far this year. The shares of the company tumbled 12.3% while the industry gained 2.1% in the period.
In the quarter, research and development expenses were down 22.9% year over year to $21.6 million due to transition of company’s focus from Onivyde to its pipeline.
General and administrative expenses were down 13.8% year over year to $5.6 million during the quarter as headcount decreased as a part of restructuring activities in the fourth quarter of 2016.
Onivyde Sale
As part of a strategic review of Merrimack’s business, the company sold all the rights to Onivyde and its generic version of Doxil injection to Ipsen S.A. The company had announced its plan to divest the asset and focus on its pipeline of cancer drugs in January. The company closed the deal on Apr 3 after receiving approval from its shareholders.
Subsequent to the quarter, in April, the company received $575 million in cash upon the close of its asset sale to Ipsen. Merrimack is eligible toreceive up to $450 million in additional regulatory approval-based milestone payments as part of the deal. Moreover, the company has retained the rights to milestone payments of up to $33 million from a previous license and collaboration agreement with Shire plc for the development and commercialization of Onivyde outside the U.S.
The company used the proceeds from the sale to redeem a senior notes debt due in 2022 and invested in the development of its oncology pipeline. The board also authorized a special dividend of $140 million to its shareholders from the proceeds which is payable later this month.
Focus Shifts to Early-Stage Pipeline
With the sale of its only marketed product, the company will now focus its resources on the development of its three pipeline candidates – MM-121/seribantumab (heregulin-positive, locally advanced or metastatic non-small cell lung cancer (NSCLC), MM-141/istiratumab (pancreatic cancer) and MM-310 (solid tumor). The company has already initiated a phase I study in MM-310 in solid tumors. The data from this study is expected in 2018.
The company expects to initiate a phase II study to evaluate MM-121 for the treatment of HER2 negative metastatic breast cancer. Data from ongoing phase II studies evaluating MM-121 in non-small cell lung cancer and MM-141 in front-line metastatic pancreatic cancer is expected in 2018.
Our Take
With sale of Onivyde, Merrimack is now a developmental stage company. Thus, the successful development of other candidates in its pipeline is critical for Merrimack’s growth prospects. We expect investors to remain focused on further updates provided by the company on its pipeline candidates.
Merrimack Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Enzo’s loss per share estimates narrowed 25% to 12 cents for 2017 over the last 60 days. The company posted positive earnings surprises in the four trailing quarters, with an average beat of 39.17%.
Catabasis’ loss per share estimates narrowed 13% to $1.74 for 2017 over the last 60 days. The company posted positive earnings surprises in all the four trailing quarters, with an average beat of 7.6%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Merrimack (MACK) Q1 Loss Wider than Expected, Sells Onivyde
Merrimack Pharmaceuticals, Inc. (MACK - Free Report) reported a loss of 22 cents per share in the first quarter of 2017, wider than the Zacks Consensus Estimate of a loss of 7 cents. The company had reported a loss of 32 cents in the year-ago quarter.
Merrimack sold its only marketed product, Onivyde, to Ipsen in Jan 2017 through a definitive asset purchase and sale agreement for $1 billion. Merrimack did not record any revenues in the quarter as there was no marketed product. The consensus estimate for revenues was $34.8 million.
Merrimack’s shares gained 5.9% following the release of its first-quarter results. However, shares of Merrimack have underperformed the Zacks classified Medical Biomed/Genetics industry so far this year. The shares of the company tumbled 12.3% while the industry gained 2.1% in the period.
In the quarter, research and development expenses were down 22.9% year over year to $21.6 million due to transition of company’s focus from Onivyde to its pipeline.
General and administrative expenses were down 13.8% year over year to $5.6 million during the quarter as headcount decreased as a part of restructuring activities in the fourth quarter of 2016.
Onivyde Sale
As part of a strategic review of Merrimack’s business, the company sold all the rights to Onivyde and its generic version of Doxil injection to Ipsen S.A. The company had announced its plan to divest the asset and focus on its pipeline of cancer drugs in January. The company closed the deal on Apr 3 after receiving approval from its shareholders.
Subsequent to the quarter, in April, the company received $575 million in cash upon the close of its asset sale to Ipsen. Merrimack is eligible toreceive up to $450 million in additional regulatory approval-based milestone payments as part of the deal. Moreover, the company has retained the rights to milestone payments of up to $33 million from a previous license and collaboration agreement with Shire plc for the development and commercialization of Onivyde outside the U.S.
The company used the proceeds from the sale to redeem a senior notes debt due in 2022 and invested in the development of its oncology pipeline. The board also authorized a special dividend of $140 million to its shareholders from the proceeds which is payable later this month.
Focus Shifts to Early-Stage Pipeline
With the sale of its only marketed product, the company will now focus its resources on the development of its three pipeline candidates – MM-121/seribantumab (heregulin-positive, locally advanced or metastatic non-small cell lung cancer (NSCLC), MM-141/istiratumab (pancreatic cancer) and MM-310 (solid tumor). The company has already initiated a phase I study in MM-310 in solid tumors. The data from this study is expected in 2018.
The company expects to initiate a phase II study to evaluate MM-121 for the treatment of HER2 negative metastatic breast cancer. Data from ongoing phase II studies evaluating MM-121 in non-small cell lung cancer and MM-141 in front-line metastatic pancreatic cancer is expected in 2018.
Our Take
With sale of Onivyde, Merrimack is now a developmental stage company. Thus, the successful development of other candidates in its pipeline is critical for Merrimack’s growth prospects. We expect investors to remain focused on further updates provided by the company on its pipeline candidates.
Merrimack Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Merrimack Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | Merrimack Pharmaceuticals, Inc. Quote
Zacks Rank & Key Picks
Merrimack currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the healthcare sector are Enzo Biochem, Inc. (ENZ - Free Report) and Catabasis Pharmaceuticals, Inc. . Both the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Enzo’s loss per share estimates narrowed 25% to 12 cents for 2017 over the last 60 days. The company posted positive earnings surprises in the four trailing quarters, with an average beat of 39.17%.
Catabasis’ loss per share estimates narrowed 13% to $1.74 for 2017 over the last 60 days. The company posted positive earnings surprises in all the four trailing quarters, with an average beat of 7.6%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>