On November 7, 2018 Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK), a research and clinical development oncology company focused on biomarker-defined cancers, reported its third quarter 2018 financial results for the period ended September 30, 2018 and provided a strategic update (Press release, Merrimack, NOV 7, 2018, View Source [SID1234531175]).
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"Following a comprehensive review of our drug candidate pipeline, we have determined that a corporate restructuring provides the best path forward to reduce operational costs and maximize value. Naturally, this step was the result of an extremely difficult decision and we regret its impact on the affected members of our team, to whom we remain grateful for their contributions to Merrimack," said Richard Peters, M.D., Ph.D., President and Chief Executive Officer. "Going forward, we remain committed to the efficient development of targeted therapies for biomarker-defined cancers, as we are now focused on our clinical development program for MM-310, for which we anticipate providing another safety update in Q1 2019, and our emerging preclinical candidates, MM-401 and MM-201."
Strategic Update
The Company conducted an internal review of its pipeline, the results of which are outlined below:
Corporate: Reflective of its updated development plans, Merrimack is initiating a corporate restructuring intended to maximize value and preserve its ability to capture outstanding milestones from Ipsen, which the Company intends to pass through to shareholders, net of any taxes owed and subject to there being sufficient surplus at that time. This restructuring includes a workforce reduction of approximately 60%, including the elimination of all open positions, to be initiated immediately and completed by February 2019. This restructuring, together with other restructuring and cost cutting measures that the Company could implement in the future, provide the Company with the potential to extend its cash runway into at least the second half of 2022. In parallel, Merrimack has retained external advisors to explore strategic alternatives.
MM-121: Based on the results of the interim analysis of its randomized Phase 2 SHERLOC study that were announced on October 19, 2018, Merrimack is discontinuing development of all ongoing MM-121 programs, including terminating the SHERBOC study, its companion Phase 2 clinical trial evaluating MM-121 in metastatic breast cancer.
MM-310: After treating the first 14 patients in the first dose-escalating regimen in Merrimack’s Phase 1 clinical trial of MM-310 in solid tumors, the study has been amended to test an alternative dosing schedule. Early data from the every three week dosing schedule regimen showed signs of encouraging antitumor activity in four patients, including two non-small cell lung cancer patients, one soft tissue sarcoma patient and one ovarian cancer patient who additionally had a 70% reduction of CA-125, an associated tumor marker. However, emerging cumulative grade 3 peripheral neuropathy following multiple cycles of treatment was observed in three patients. Pharmacokinetic and preclinical data indicate that lengthening the time between dosing may improve tolerability of MM-310. Patients are now being screened under an every four week schedule amendment and will be dosed starting at the highest dose level reached in the prior regimen. Merrimack plans to provide an additional safety update from the study in Q1 2019.
Preclinical Programs: Merrimack is narrowing the scope of its preclinical efforts to prudently advance its two most promising programs, which are MM-401, its previously undisclosed immuno-oncology program, an agonistic antibody targeting a novel immuno-oncology target, TNFR2, and MM-201, a highly stabilized agonist-Fc fusion protein targeting death receptors 4 and 5. The Company will feature data from the MM-401 program at the 30th EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Symposium on November 14, 2018 in a poster titled, "Targeting TNFR2 – A Key Regulator of the Tumor Immunosuppressive Microenvironment," which highlights robust responses to MM-401 as a monotherapy in multiple mouse tumor models, including in PD-1 antibody-resistant tumors, as well as in combination with checkpoint inhibition.
Third Quarter 2018 Financial Results
In the third quarter and more recently, Merrimack received three ONIVYDE-related milestone payments:
$18.0 million resulting from the sale of ONIVYDE in two additional major European countries, which was received and announced in August 2018;
$5.0 million resulting from the sale of ONIVYDE in the first major non-European, non-Asian country, which was received and announced in September 2018; and
$5.0 million of the $10.0 million milestone for the first patient dosed in a pivotal clinical trial of ONIVYDE in an indication other than pancreatic cancer, which was received in October 2018, subsequent to the end of the third quarter. Merrimack received $5.0 million triggered by the commencement of a multi-part study that Ipsen and Servier are conducting in small cell lung cancer (SCLC). The remaining $5.0 million would be paid if and when a decision is made to progress to the randomized part of the study focused on efficacy.
The following summarizes Merrimack’s financial results for the quarter ended September 30, 2018:
Research and development expenses for the third quarter ended September 30, 2018 were $13.0 million, compared to $13.6 million for the comparable period of 2017. Research and development spending for the third quarter of 2018 was lower versus the comparable period in 2017 primarily due to the phasing of clinical development programs;
General and administrative expenses for the third quarter ended September 30, 2018 were $3.8 million, compared to $3.4 million for the comparable period of 2017. General and administrative spending for the third quarter of 2018 was higher versus the comparable period in 2017 primarily due to the timing of external corporate expenses;
Net loss for the third quarter ended September 30, 2018 from continuing operations was $12.3 million, or $0.92 per share, compared to a net loss of $5.4 million from continuing operations, or $0.40 per share, for the comparable period of 2017. The comparable period of 2017 included a one-time non-cash gain of approximately $10.8 million related to the deconsolidation of a subsidiary; and
As of September 30, 2018, Merrimack had 13.3 million shares of common stock, $0.01 par value per share, outstanding.
Financial Outlook
As a result of the corporate restructuring, Merrimack believes that its cash, cash equivalents and marketable securities of $84.8 million as of September 30, 2018, plus the $5.0 million ONIVYDE milestone received in October but excluding any potential additional milestone payments, together with other restructuring and cost cutting measures that Merrimack could implement in the future, provide Merrimack with the potential to fund its operations into at least the second half of 2022.
Merrimack remains eligible to receive additional milestone payments resulting from the Company’s asset sale to Ipsen in 2017:
Merrimack is entitled to receive up to $5.0 million in milestone payments triggered by Ipsen’s and Servier’s decision to progress their ongoing multi-part clinical trial evaluating ONIVYDE in SCLC into the randomized part of the study focused on efficacy. This milestone payment is excluded from the Company’s cash runway guidance until achieved; and
Merrimack is entitled to receive an aggregate of $450.0 million in regulatory-based milestones from Ipsen, which Merrimack has said it expects to pass through to stockholders, net of any taxes owed and subject to there being sufficient surplus at that time, consisting of:
$225.0 million upon approval by the FDA of ONIVYDE for the first-line treatment of metastatic adenocarcinoma of the pancreas, subject to certain conditions;
$150.0 million upon approval by the FDA of ONIVYDE for the treatment of small cell lung cancer after failure of first-line chemotherapy; and
$75.0 million upon approval by the FDA of ONIVYDE for an additional indication unrelated to those described above.
Conference Call and Webcast
Merrimack will host a live conference call and webcast today, Wednesday, November 7, 2018 at 8:30 am ET, to provide an update on the Company, including the results of its portfolio review, and a summary of these financial results.
Investors and the general public are invited to listen to the call by dialing (877) 564-1301 (domestic) or (224) 357-2394 (international) five minutes prior to the start of the call and providing the passcode 4685885. A listen-only webcast of the call can be accessed in the Investors section of Merrimack’s website, investors.merrimack.com, and a replay of the call will be archived there for six weeks following the call.