Merrimack Pharmaceuticals, Inc. (MACK) reported a loss of 9 cents per share in the fourth quarter of 2014, narrower than the Zacks Consensus Estimate of a loss of 23 cents and the year-ago loss of 33 cents per share.
Merrimack Pharma earned collaboration revenues of $33.9 million compared to $7.8 million in the year-ago period. Revenues surpassed the Zacks Consensus Estimate of $25 million. Revenues primarily comprised $23.4 million received from Sanofi (SNY) related to the collaboration for MM-121 and $10.5 million received from Baxter International (BAX) in relation to the collaboration for MM-398.
In 2014, Merrimack Pharma reported a loss of 80 cents per share compared to a loss of $1.32 in the previous year. Revenues were up 115% to $102.8 million.
The Quarter in Detail
Research and development expenses were $30.7 million, up 2.3% from the year-ago quarter. The increase was primarily driven by pipeline development, and pre-clinical and other general expenses.
General and administrative expenses increased 37.7% from the year-ago quarter to $8.3 million primarily driven by interest expenses.
Pipeline Update
Merrimack Pharma is currently working on the development of its pipeline, which includes MM-398 and a number of early- and mid-stage candidates. Its lead candidate, MM-398, is being developed for the treatment of patients suffering from metastatic pancreatic cancer, whose disease progressed after treatment with Gemzar.
The company initiated a rolling submission of a new drug application to the FDA for MM-398 in late 2014, which is expected to be complete in late first quarter or early second quarter of 2015. Given MM-398’s fast track status (received in Nov 2014), Merrimack Pharma expects the candidate to receive regulatory approval in the fourth quarter of 2015. Additionally, Merrimack Pharma intends to initiate studies on MM-398 for front-line pancreatic and gastric cancers in 2015.
Meanwhile, Merrimack Pharma decided to stop patient enrolment in a phase II study on MM-111 (in combination with Herceptin and Taxol), which is being developed for the treatment of second-line HER2+ gastric/gastroesophageal cancer. However, after witnessing shorter duration of progression-free survival in the patients treated with the combination drug compared to those on the control arm (receiving Herceptin plus Taxol alone), the Data Safety Monitoring Board advised Merrimack Pharma to stop patient enrolment in this study. The company said that currently it does not intend to make further investment in the development of MM-111.
2015 Outlook
Merrimack Pharma expects that its existing unrestricted cash and cash equivalents, available-for-sale securities (as of Dec 31, 2014) and anticipated cost sharing reimbursements and milestone payments from Baxter under their license and collaboration agreement will be sufficient for funding its operations into 2016. Additional payments from Baxter should extend the company’s cash runway.
Our Take
Although we are pleased with the company’s progress with the development of MM-398, we are disappointed with the status of MM-111. With the probable discontinuation of the development of the candidate, Merrimack Pharma will become highly dependent on its only regulatory-phase candidate, MM-398.
Merrimack Pharma carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Cytokinetics, Incorporated (CYTK), carrying a Zacks Rank #1 (Strong Buy).
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