A month has gone by since the last earnings report for Merrimack Pharmaceuticals (MACK - Free Report) . Shares have lost about 7.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Merrimack due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Merrimack Suffers Wider-Than-Expected Loss in Q3
Merrimack incurred a loss of 92 cents per share for the third quarter of 2018, significantly wider than the Zacks Consensus Estimate of a loss of 27 cents and the year-ago quarter’s loss of 40 cents as well.
We remind investors that Merrimack sold its only marketed product, Onivyde, last year to Ipsen. The company could not generate any revenues in the reported quarter in absence of a marketed product in its portfolio.
In the quarter under review, research and development expenses decreased 4.4% year over year to $13 million owing to the phasing of clinical studies.
General and administrative expenses increased 11.8% year over year to $3.8 million on external corporate expenses.
The company had cash, cash equivalents and marketable securities of $84.8 million as of Sep 30, 2018. It received an additional $18-million milestone payment from Shire on the sale of Onivyde in two major European countries during August 2018.
In September, the company announced that it gained a $5-million milestone from Shire following the sale of Onivyde in the first major non-European and non-Asian country in accordance with the terms of asset sale to Ipsen in 2017. Merrimack is eligible to receive an aggregate of $450 million as milestone payments from Ipsen, subject to stockholders’ approval.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 12.17% due to these changes.
Currently, Merrimack has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Merrimack has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.