Merrimack Pharmaceuticals is starting off the year with significant changes. The Cambridge, MA, company has decided to sell its only marketed products—a pair of cancer drugs—to pay off debt and invest in a new set of experimental medicines.
French pharmaceutical company Ipsen has bought Merrimack’s rights to the nanoparticle pancreatic cancer drug Onivyde and its generic version of the chemotherapy drug doxorubicin (Doxil). Merrimack (NASDAQ: MACK) will receive $575 million in cash up front and is eligible for another $450 million in downstream payments.
Merrimack said it would use $195 million to wipe out debt and put another $125 million into three experimental cancer drugs: MM-121 (seribantumab), MM-141 (istiratumab), and MM-310. The company considers the trio the most promising candidates in its portfolio. Stockholders will receive at least $200 million through a special dividend. All future milestone payments that Merrimack might earn in the Ipsen deal would also go to shareholders. Those payments come due if Onivyde—a nanoparticle drug that delivers the chemotherapy irinotecan—is approved in the U.S. for three different additional cancer types.
In a statement, Merrimack chairman Gary Crocker said the deal was part of a plan to be a “more focused research and development company.” The company said it now has cash to last through the second half of 2019, by which time it expects key data for each of the three drugs that are now the focus of its R&D efforts. Both seribantumab and istiratumab, antibody drugs for cancer, should produce Phase 2 data in 2018—the former in lung cancer, the latter in pancreatic cancer. MM-310, a nanoparticle drug that delivers the chemotherapy docetaxel, will begin Phase 1 testing this quarter.
Merrimack won FDA approval of Onivyde in October 2015 for patients whose pancreatic cancer hasn’t responded to prior therapies. But the FDA approved Onivyde with a warning about side effects, and the drug’s launch didn’t meet expectations. Onivyde generated $37.3 million in sales over the first nine months of 2016, according to an SEC filing. Merrimack, in the meantime, continued to rack up net losses—nearly $120 million over that same span—and watched its share price flounder below its $7 per share IPO price in 2012. Shares of Merrimack closed at $3.60 apiece last Friday, their lowest levels since late 2013.
CEO Robert Mulroy resigned in October as part of a restructuring that saw Merrimack cut 22 percent of its workforce.
Merrimack will hold a conference call Monday morning to discuss the deal.