CAMBRIDGE, Mass., Nov. 9, 2016 /PRNewswire/ -- Merrimack
Pharmaceuticals, Inc. (Nasdaq: MACK) today announced its third
quarter 2016 financial results. Merrimack will host a live
conference call and webcast today, Wednesday, November 9 at 4:30 p.m., Eastern time, to provide an update on
Merrimack's progress as well as a summary of these 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 89606889. 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.
ONIVYDE® (irinotecan liposome injection)
Update
ONIVYDE updates include:
- Receipt by Shire plc of European Marketing Authorization for
ONIVYDE for the treatment of patients with metastatic
adenocarcinoma of the pancreas following gemcitabine-based
therapy;
- Establishment of an initial tolerable dose for ONIVYDE in
combination with 5-FU/LV and oxaliplatin in an ongoing study
evaluating its use in patients with previously untreated metastatic
pancreatic cancer;
- Issuance by the Centers for Medicare & Medicaid Services
(CMS) of a unique, permanent J-code for ONIVYDE, which will
streamline the billing and reimbursement process for healthcare
providers. The new J-code, J9205 (Injection, irinotecan liposome,
1mg), will become effective for dates of service beginning
January 1, 2017 and supersedes all
other temporary codes;
- Shipments of ONIVYDE from specialty distributors to individual
accounts and facilities, a measure of product demand, grew 18% in
the third quarter of 2016 as compared to shipments in the second
quarter of 2016; and
- Recognition of $16.8 million of
gross product revenues, or $14.5
million of net product revenues, from U.S. commercial sales
of ONIVYDE for the third quarter of 2016. This is compared to
$14.8 million of gross product
revenues, or $12.9 million of net
product revenues for the second quarter of 2016, which represents
an increase in net product revenues of 13% over the prior
quarter.
Key Recent Events
Merrimack's key recent events include:
- Acceptance for review of an Abbreviated New Drug Application
(ANDA) filed by Actavis LLC for generic doxorubicin hydrochloride
(HCl) liposome injection (DOXIL®). This is the first
product developed by Merrimack under a development, license and
supply agreement with Actavis pursuant to which Merrimack is
responsible for the development and commercial supply of bulk drug
product. If the product is approved, Merrimack is eligible to
receive a percentage share of net profits in the mid-twenties on
future sales of doxorubicin HCl liposome injection in the United States.
- Announcement on October 3, 2016,
of a 22% reduction in headcount as part of a major corporate
restructuring with the objective of prioritizing its research and
development on a focused set of systems biology-derived oncology
products and strengthening its financial runway. On this same date,
Merrimack also announced the resignation of Robert Mulroy, its former President and Chief
Executive Officer.
- Initiation, in connection with the corporate restructuring, of
a strategic review of the company's pipeline, including the
clinical and financial prioritization of its programs. This review
may result in amendments to Merrimack's ongoing clinical trials and
other changes to its programs. The company expects to complete this
review by the end of 2016. In the absence of clinical trial
amendments, Merrimack believes that the data readouts of trials for
its lead product candidates, including potentially MM-302, MM-121
and ONIVYDE in front-line metastatic pancreatic cancer, will likely
extend beyond its prior guidance. As part of this strategic
review, the company will continue to assess these data timelines
and the potential impact of any such clinical trial amendments, and
will report these findings by year end.
Third Quarter 2016 Financial Results
The following summarizes Merrimack's financial results from the
quarter ended September 30, 2016:
- Product revenues from the commercial sale of ONIVYDE, net of
discounts, allowances and reserves, were $14.5 million for the third quarter of 2016,
compared to $12.9 million for the
second quarter of 2016. This represents an increase of $1.6 million, or 13%, over the prior
quarter;
- License and collaboration revenues were $12.4 million for the third quarter of 2016,
compared to $19.3 million for the
second quarter of 2016. This represents a decrease of $6.9 million from the prior quarter. The majority
of this decrease was related to a $10.0
million substantive milestone achieved during the second
quarter of 2016 offset by increased revenue that was recognized
under the proportional performance revenue recognition model;
- Aggregate research and development and selling, general and
administrative expenses were $50.1
million for the third quarter of 2016, compared to
$61.7 million for the second quarter
of 2016. This represents a decrease of $11.6
million, or 19%. The majority of this decrease was related
to a $10.0 million milestone owed to
PharmaEngine in the second quarter of 2016;
- Restructuring expenses were $0.8
million for the third quarter of 2016 and were related to
Merrimack implementing a 22% reduction in headcount as part of a
major corporate restructuring with the objective of prioritizing
its research and development on a focused set of systems
biology-derived oncology products and strengthening its financing
runway;
- Interest expense was $6.9 million
for the third quarter of 2016, compared to $21.1 million for the second quarter of 2016.
This $14.2 million decrease was
primarily due to a $14.6 million
one-time, non-cash loss related to the conversion of an aggregate
principal amount of $64.2 million of
Merrimack's convertible notes in April
2016; and
- Net loss attributable to Merrimack for the third quarter of
2016 was $30.1 million, or
$0.23 per share, compared to a net
loss attributable to Merrimack of $50.8
million, or $0.40 per share,
for the second quarter of 2016.
Financial Outlook
In an effort to provide further insight into the expected timing
of upcoming research and development and regulatory milestones,
Merrimack provides the following schedule:
Milestone
Trigger
|
|
Cash
Inflows
from Shire
plc
(in
millions)
|
|
|
Cash
Outflows to
PharmaEngine,
Inc.
(in
millions)
|
|
|
Expected
Timing
|
|
Milestone
Accounting Treatment
|
Sale1 of
ONIVYDE in first major European country
|
|
$
|
30.0
|
|
|
$
|
25.5
|
|
|
Q4 2016
|
|
Substantive
|
Sale1 of
ONIVYDE in two additional major
European
countries
|
|
|
30.0
|
|
|
|
3.0
|
|
|
First half of
2017
|
|
Substantive
|
First patient dosed
in small cell lung cancer trial
|
|
|
10.0
|
|
|
|
—
|
|
|
First half of
2017
|
|
Non-Substantive
|
Sale1 of
ONIVYDE in first major non-European,
non-Asian country
|
|
|
5.0
|
|
|
|
—
|
|
|
First half of
2017
|
|
Substantive
|
Sale1 of
ONIVYDE in first Asian country
|
|
|
25.0
|
|
|
|
25.0
|
|
|
Second half of
2017
|
|
Substantive
|
Total expected cash
flows from upcoming
milestones
|
|
$
|
100.0
|
|
|
$
|
53.5
|
|
|
|
|
|
1 Sale means the earlier of first commercial sale or
receipt of pricing/reimbursement approval.
- In addition to the above milestones, future potential research
and development and regulatory milestone obligations from Shire are
$427.5 million and are offset by
$35.0 million of future potential
commitments to PharmaEngine related to these milestones.
With respect to its fiscal 2016 guidance, Merrimack:
- Lowers and narrows its previously provided expense guidance
range, such that Merrimack now anticipates aggregate research and
development and selling, general and administrative expenses for
2016, when calculated in accordance with GAAP, to be in the range
of $235.5 million to $245.5 million.
Excluding anticipated milestone obligations to PharmaEngine of
$35.5 million, this corresponds to a
range of $200.0 million to $210.0
million of anticipated aggregate research and development
and selling, general and administrative expenses for 2016, which is
a non-GAAP financial measure.
With respect to its fiscal 2017 guidance:
- Merrimack had previously provided guidance as to the
achievement of $46.5 million of net
milestones related to ONIVYDE in 2016. Merrimack is revising
this guidance to reflect that Merrimack now anticipates that only
$4.5 million of these net milestones
are expected to be achieved in 2016. Merrimack now anticipates that
the achievement of the remaining $42.0
million of net milestones related to ONIVYDE will occur in
the first half of 2017. This remaining amount is made up of
$32.0 million of net substantive
milestones, which are expected to increase net income in 2017, and
$10.0 million of net non-substantive
milestones, which are expected to increase deferred revenues on
Merrimack's balance sheet, as they are included in the Shire
proportional performance revenue recognition model;
- Merrimack anticipates that aggregate research and development
and selling, general and administrative expenses for 2017, when
calculated in accordance with GAAP, will be approximately
$193.0 million, which includes the
anticipated achievement of $28.0
million of milestone obligations to PharmaEngine. This
corresponds to aggregate research and development and selling,
general and administrative expenses, excluding anticipated
milestone obligations to PharmaEngine, a non-GAAP financial
measure, of approximately $165.0
million for 2017; and
- Merrimack expects that at its currently forecasted spending
rates, its existing financial resources, together with anticipated
net product revenues and net royalty payments from sales of
ONIVYDE, the net milestone payments and reimbursements it expects
to receive under its Shire collaboration and access to its
$25.0 million credit facility, will
be sufficient to fund its operations into 2018.
A table reconciling guidance for aggregate research and
development and selling, general and administrative expenses,
excluding anticipated milestone obligations to PharmaEngine, a
non-GAAP financial measure, to aggregate research and development
and selling, general and administrative expenses calculated in
accordance with GAAP is included at the end of this press
release.
About Merrimack
Merrimack is a fully integrated biopharmaceutical company that
views cancer as a complex engineering challenge. Through systems
biology, which brings together the fields of biology, computing and
engineering, Merrimack aims to decrease uncertainty in drug
development and clinical validation, and move discovery efforts
beyond trial and error. Such an approach has the potential to make
individualized treatment of patients a reality. Merrimack's first
commercial product, ONIVYDE® (irinotecan liposome
injection), was approved by the U.S. FDA in October 2015. With four additional candidates in
clinical studies, several in preclinical development and multiple
biomarkers designed to support patient selection, Merrimack is
building one of the most robust oncology pipelines in the industry.
For more information, please visit Merrimack's website at
www.merrimack.com or connect on Twitter at @MerrimackPharma.
Cautionary Note on Forward-Looking Statements
To the extent that statements contained in this press release
are not descriptions of historical facts, they are forward-looking
statements reflecting the current beliefs and expectations of
management made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements include any statements about Merrimack's
strategy, future operations, future financial position, future
revenues and future expectations and plans and prospects for
Merrimack, and any other statements containing the words
"anticipate," "believe," "estimate," "expect," "intend," "may,"
"plan," "predict," "project," "target," "potential," "will,"
"would," "could," "should," "continue," and similar expressions. In
this press release, Merrimack's forward-looking statements include,
among others, statements about expectations regarding the outcome
and effect of its ongoing strategic review of its product
candidates, expected achievement of milestones, potential cash
inflows and outflows, revenue and expenses and the availability of
funding sufficient to fund Merrimack's operations. Such
forward-looking statements involve substantial risks and
uncertainties that could cause Merrimack's clinical development
programs, future results, performance or achievements to differ
significantly from those expressed or implied by the
forward-looking statements. Such risks and uncertainties include,
among others, the uncertainties inherent in the future sales of
products, initiation of future clinical trials, availability of
data from ongoing clinical trials, expectations for regulatory
approvals, development progress of Merrimack's companion
diagnostics, availability of funding sufficient for Merrimack's
foreseeable and unforeseeable operating expenses and capital
expenditure requirements, and other matters that could affect the
availability or commercial potential of Merrimack's products,
product candidates or companion diagnostics. Merrimack undertakes
no obligation to update or revise any forward-looking statements.
Forward-looking statements should not be relied upon as
representing Merrimack's views as of any date subsequent to the
date hereof. For a further description of the risks and
uncertainties that could cause actual results to differ from those
expressed in these forward-looking statements, as well as risks
relating to Merrimack's business in general, see the "Risk Factors"
section of Merrimack's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission (SEC) on August 4, 2016 and other reports Merrimack files
with the SEC.
Merrimack
Pharmaceuticals, Inc.
|
|
Condensed
Consolidated Statements of Operations and
|
|
Comprehensive Loss
(unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(in thousands,
except per share amounts)
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Product revenues,
net
|
|
$
|
14,493
|
|
|
$
|
12,851
|
|
License and
collaboration revenues
|
|
|
12,417
|
|
|
|
19,332
|
|
Other
revenues
|
|
|
1,161
|
|
|
|
1,498
|
|
Total
revenues
|
|
|
28,071
|
|
|
|
33,681
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
1,010
|
|
|
|
1,872
|
|
Research and
development expenses
|
|
|
32,078
|
|
|
|
40,996
|
|
Selling, general and
administrative expenses
|
|
|
18,048
|
|
|
|
20,680
|
|
Restructuring
expenses
|
|
|
809
|
|
|
|
—
|
|
Total costs and
expenses
|
|
|
51,945
|
|
|
|
63,548
|
|
Loss from
operations
|
|
|
(23,874)
|
|
|
|
(29,867)
|
|
Other income and
expenses, net
|
|
|
(6,401)
|
|
|
|
(21,091)
|
|
Net loss
|
|
|
(30,275)
|
|
|
|
(50,958)
|
|
Net loss attributable
to non-controlling interest
|
|
|
(207)
|
|
|
|
(208)
|
|
Net loss attributable
to Merrimack
|
|
$
|
(30,068)
|
|
|
$
|
(50,750)
|
|
Other comprehensive
(loss) income
|
|
|
(3)
|
|
|
|
15
|
|
Comprehensive
loss
|
|
$
|
(30,071)
|
|
|
$
|
(50,735)
|
|
Net loss per share
available to common stockholders - basic and diluted
|
|
$
|
(0.23)
|
|
|
$
|
(0.40)
|
|
Weighted-average
common shares used in computing net loss per share available
to
common
stockholders - basic and diluted
|
|
|
129,212
|
|
|
|
126,161
|
|
Merrimack
Pharmaceuticals, Inc.
|
|
|
|
|
|
|
Selected Balance
Sheet Data (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
Cash, cash
equivalents and marketable securities
|
|
$
|
48,466
|
|
|
$
|
82,667
|
|
Working
capital
|
|
|
1,334
|
|
|
|
28,145
|
|
Total
assets
|
|
|
118,409
|
|
|
|
150,019
|
|
Total
liabilities
|
|
|
345,552
|
|
|
|
351,577
|
|
Total stockholders'
deficit
|
|
|
(226,782)
|
|
|
|
(201,404)
|
|
Merrimack
Pharmaceuticals, Inc.
|
|
|
|
Selected Cash Flow
Data (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
(in
thousands)
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
Net cash used in
operating activities
|
|
$
|
(34,918)
|
|
|
$
|
(50,903)
|
|
Net cash provided by
investing activities
|
|
|
48,342
|
|
|
|
22,179
|
|
Net cash provided by
financing activities
|
|
|
1,548
|
|
|
|
1,978
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
$
|
14,972
|
|
|
$
|
(26,746)
|
|
This press release presents guidance regarding aggregate
research and development and selling, general and administrative
expenses, excluding anticipated milestone obligations to
PharmaEngine, which is a financial measure not calculated in
accordance with GAAP. Merrimack is providing non-GAAP information
that excludes one-time anticipated milestone obligations to
PharmaEngine because of the nature of these items and the impact
they have on the analysis of underlying business performance and
trends, including the fact that these anticipated milestone
obligations to PharmaEngine are entirely offset by anticipated
milestone obligations from Shire. Management believes that
providing information regarding adjusted aggregate research and
development and selling, general and administrative expenses
enhances investors' understanding of Merrimack's performance and of
trends that facilitate comparisons between periods. This
information should be considered in addition to, but not in lieu
of, information prepared in accordance with GAAP. Management also
uses aggregate research and development and selling, general and
administrative expenses, excluding anticipated milestone
obligations to PharmaEngine, to establish budgets and operational
goals and to manage Merrimack's business.
The following is a reconciliation of GAAP guidance to non-GAAP
guidance:
Merrimack
Pharmaceuticals, Inc.
|
|
Reconciliation to
Aggregate Research and Development and Selling,
|
|
General and
Administrative Expenses, Excluding Anticipated
Milestone
|
|
Obligations to
PharmaEngine (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending
December 31, 2016
|
|
|
|
|
|
(in
millions)
|
|
Low
End
of
Range
|
|
|
High
End
of
Range
|
|
|
Year
Ending
December 31,
2017
|
|
Anticipated aggregate
research and development and selling, general
and
administrative expenses (GAAP measure)
|
|
$
|
235.0
|
|
|
$
|
245.0
|
|
|
$
|
193.0
|
|
Less: expenses
related to one-time anticipated milestone obligations to
PharmaEngine
|
|
|
(35.0)
|
|
|
|
(35.0)
|
|
|
|
(28.0)
|
|
Anticipated aggregate
research and development and selling, general
and
administrative expenses, excluding anticipated milestone
obligations to PharmaEngine (non-GAAP measure)
|
|
$
|
200.0
|
|
|
$
|
210.0
|
|
|
$
|
165.0
|
|
CONTACT:
Geoffrey M. Grande, CFA
617-441-7602
ggrande@merrimack.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/merrimack-reports-third-quarter-2016-financial-results-300359962.html
SOURCE Merrimack Pharmaceuticals, Inc.