Baxter International Inc. (BAX) revealed that it has achieved an exclusive license and entered a collaboration agreement with Cambridge, MA-based biopharmaceutical company Merrimack Pharmaceuticals, Inc. (MACK) for the development and commercialization of MM-398.
Under the agreement, Baxter will gain commercialization rights for all potential indications of MM-398 outside the U.S. and Taiwan, while Merrimack will retain commercialization rights in the U.S. The commercialization rights in Taiwan are held separately.
Under the agreement, Merrimack will receive an upfront payment of $100 million from Baxter. The payment will be recorded by Baxter as a special pre-tax in-process research and development charge in the third quarter of this year.
Merrimack is also eligible to receive $120 million in regulatory milestone payments related to the first pancreatic cancer indication as these milestones are achieved, and also $280 million in development and regulatory milestone payments for a second pancreatic cancer indication.
Further, Merrimack is eligible to receive $220 million in future development and regulatory milestone payments related to two additional indications. It has also the potential to receive $250 million in sales milestone payments, as well as tiered royalties on net sales of MM-398 in the licensed markets.
What is MM-398?
MM-398 is a nanoliposomal irinotecan injection, also known as “nal-IRI”. It is basically an investigational drug candidate for which Merrimack is preparing a New Drug Application in the U.S. for the treatment of patients suffering from deadly and difficult to diagnose pancreatic cancer. These patients are previously treated with a gemcitabine-based therapy.
MM-398 is designed to increase drug deposition and prolong cytotoxic effects, with the aim of improving anti-cancer traits. In May 2014, Merrimack announced that the Phase 3 trial, known as NAPOLI-1, studying MM-398 in combination with 5-fluorouracil (5-FU) and leucovorin achieved its primary and secondary endpoints for metastatic pancreatic cancer patients, who were treated with a gemcitabine-based therapy previously.
In the study, the combination of MM-398 with 5-FU and leucovorin demonstrated a statistically significant improvement in overall survival, progression free survival and overall response rate compared to the control arm of 5-FU and leucovorin alone. It was the first positive global Phase 3 study in a post-gemcitabine setting to show a survival benefit in this deadly disease.
The U.S. Food and Drug Administration (FDA) and European Medicines Agency have approved MM-398 orphan drug designation in metastatic pancreatic cancer. Merrimack also plans to submit a New Drug Application for MM-398 with the FDA in 2014. Meanwhile, Baxter plans to submit application for regulatory approvals outside U.S. beginning next year.
Recent Development
In March this year, Baxter had announced plans to split-up its biopharmaceuticals and medical device segments into two independent companies in order to put greater management focus on the two businesses, effectively commercialize product offerings, efficiently allocate resources to high growth areas, and bring flexibility in deciding on growth and investment strategies.
Baxter’s biopharmaceuticals/bioscience division will focus on immune deficiencies and blood-related disorders and includes the plan to form a partnership or sale of its drug development programs based on the flu and Lyme diseases.
BAX’s medical products division manufactures intravenous (IV) solutions and administration sets, premixed drugs and drug-reconstitution systems, pre-filled vials and syringes for injectable drugs, IV nutrition products, infusion pumps, and inhalation anesthetics.
Zacks Rank
Currently, Baxter retains a Zacks Rank #4 (Sell). Some better-ranked stocks in the medical products industry include ICU Medical, Inc. (ICUI) and Symmetry Medical, Inc. (SMA). ICU Medical sports a Zacks Rank #1 (Strong Buy), while Symmetry Medical carries a Zacks Rank #2 (Buy).
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