- FDA Approval Triggers $225 Million Milestone Payment from Ipsen
to Merrimack
- Merrimack Expects to Hold Special Meeting of Stockholders to
Approve Plan of Dissolution in May 2024
- Following Approval of Plan of Dissolution, Merrimack Expects to
Issue a Liquidating Dividend Currently Estimated to be Between
$14.65 and $15.35 per Share in the Late Spring or Early Summer
Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK) (“Merrimack” or
the “Company”) reported that Ipsen, SA (“Ipsen”) issued a press
release today announcing the U.S. Food and Drug Administration has
approved the supplemental new drug application for Onivyde®
(irinotecan liposome injection) plus 5 fluorouracil/leucovorin and
oxaliplatin (NALIRIFOX) as a first-line treatment for people living
with metastatic pancreatic ductal adenocarcinoma (mPDAC).
Under the terms of the 2017 Asset Purchase Agreement between
Ipsen and Merrimack (the “Ipsen Agreement”), previously approved by
Merrimack’s stockholders, this U.S. Food and Drug Administration
approval triggers a $225 million milestone payment from Ipsen to
Merrimack which is due on or before March 29, 2024.
“Today’s announcement is the culmination of nearly seven years
of clinical trials and regulatory approval efforts by Ipsen
following its 2017 purchase of the Onivyde technology from
Merrimack. The Company has received several payments from the Ipsen
Agreement including: a $575 million payment in 2017, a $5.7 Million
working capital adjustment payment later that year, and a $5
million milestone payment in 2019” said Gary Crocker, Chairman of
Merrimack’s Board of Directors. “The Board of Merrimack plans to
hold a Special Meeting of Stockholders to approve a plan for a
corporate dissolution and followed by a distribution of the
proceeds to our stockholders from this new $225 million milestone
payment, plus residual cash, net of corporate taxes and interest
charges accruing under IRS installment sale rules, and other
expenses.”
Merrimack’s Board of Directors has evaluated the likelihood of
receiving additional milestone payments under the Ipsen Agreement
and from the 2019 Agreement with Elevation Oncology (the “Elevation
Agreement”) and has concluded that it is unlikely that any
additional milestone payments from either agreement will become
payable. Based on this analysis, Merrimack expects to hold a
special meeting of stockholders by May of 2024 to seek approval for
the adoption of a Plan of Dissolution including issuance of a
liquidating dividend after the special meeting of stockholders. The
Plan will include establishment of a liquidating trust for the
benefit of stockholders in the unlikely event that Merrimack might
receive any future milestone payments from Ipsen or Elevation
Technology.
Stockholders subject to taxation in the United States who
receive a liquidating distribution generally will recognize a
capital gain or loss equal to the amount received for their shares
over their adjusted basis in such shares if shares are held in a
taxable account. The tax consequences of the plan of dissolution
may vary depending upon the particular circumstances of the
stockholder. We recommend that each stockholder consult their tax
advisor regarding the U.S. federal income tax consequences of the
Plan of Dissolution as well as the state, local and non-U.S. tax
consequences.
Based on the information currently available, Merrimack
management estimates that the aggregate amount of the liquidating
dividend payable to stockholders will be in the range of between
approximately $14.65 and $15.35 per share. These estimates are
based on, among other things, the receipt of the $225M milestone
from Ipsen, Merrimack’s current and projected balance of cash, cash
equivalents and marketable securities, estimated federal and state
taxes payable for 2024, interest payable to the federal government
pursuant to Internal Revenue Code Section 453A and state
governments pursuant to similar state tax provisions due on the
receipt of the Ipsen milestone payment, proceeds from the expected
exercise of stock options, and amounts that will need to be
retained by the Company to fund close down expenses and the
liquidating trust. The estimated liquidating dividend represents
Company management’s estimate of the amount to be distributed to
stockholders during the liquidation but does not represent the
minimum or maximum distribution amount. The total actual amount of
distributions, if any, could be higher or lower, or, although
highly unlikely, there may not be any liquidating distributions at
all. It is possible that any initial distribution could be followed
in the future by further distributions if it is determined that any
reserved amounts no longer need to be held by the Company. The
Company cannot predict with certainty the amount of liquidating
distributions to be paid to Merrimack’s stockholders.
About Merrimack
Merrimack Pharmaceuticals, Inc. is a biopharmaceutical company
based in Cambridge, Massachusetts that is entitled to receive up to
$225 million in contingent milestone payments related to its sale
of Onivyde to Ipsen S.A. in April 2017. This milestone payment is
payable by Ipsen on or before March 29, 2024 as Ipsen has received
FDA approval on February 13, 2024 for the use of Onivyde® plus 5
fluorouracil/leucovorin and oxaliplatin (NALIRIFOX regimen) as a
treatment of first line metastatic pancreatic ductal adenocarcinoma
(mPDAC).
Ipsen has not publicly communicated any current clinical trials
which could lead to future milestone payments under the Ipsen
Agreement. Elevation Oncology previously announced that it has
paused activities under the program from which future milestone
payments might be issued to Merrimack under the Elevation
Agreement. As a result, Merrimack is not currently expecting to
receive these additional potential milestone payments. Neither
Ipsen nor Elevation Oncology share any non-public information
regarding these programs with Merrimack.
Forward Looking Statements
Any statements made in this press release K relating to future
financial, business, conditions, plans, prospects, impacts, shifts,
trends, progress, or strategies and other such matters, including
without limitation, Merrimack’s proposed Dissolution pursuant to
its proposed Plan of Dissolution, the timing of filing of the
Certificate of Dissolution, the timing and outcome of the planned
special meeting to approve the Dissolution and the Plan of
Dissolution, the amount, number, and timing of liquidating
distributions, if any, to its stockholders, the amount of reserves,
and similar statements, are forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. In addition, when or if used in this Current Report on Form
8-K, the words “may,” “could,” “should,” “might,” “hold,”
“approve,” “receive,” “determine,” “file,” “entitle,” “solicit,”
“continue,” “conduct,” “reduce,” “report,” “seek,” “conserve,”
“distribute,” “dissolve,” “encourage,” “discontinue,” “terminate,”
“additional,” “announce,” “anticipate,” “believe,” “sufficient,”
“estimate,” “expect,” “intend,” “plan,” “potential,” “will,”
“evaluate,” “meet,” “develop,” “appropriate,” “affirmative,”
“reduce,” and similar expressions and their variants, as they
relate to Merrimack or any of Merrimack’s partners, or third
parties, may identify forward-looking statements. Merrimack
cautions that these forward-looking statements are subject to
numerous assumptions, risks, and uncertainties, which change over
time, often quickly, and in unanticipated ways. Important factors
that may cause actual results to differ materially from the results
discussed in the forward-looking statements or historical
experience include the availability, timing and amount of
liquidating distributions being different than expected; the
amounts that will need to be set aside as reserves by Merrimack
being higher than anticipated; the possible inadequacy of such
reserves to satisfy Merrimack’s obligations; potential unknown
contingencies or liabilities, and Merrimack’s potential inability
to favorably resolve them or at all; the amount of proceeds that
might be realized from the sale or other disposition of any
remaining Merrimack assets; the application of, and any changes in,
applicable tax and other laws, regulations, administrative
practices, principles and interpretations; the incurrence by
Merrimack of expenses relating to the Dissolution being different
than estimated; the ability of the Merrimack Board of Directors to
abandon, modify or delay implementation of the Dissolution, even
after stockholder approval; failure of the Company’s stockholders
to approve the proposed Plan of Dissolution; the Company’s ability
to settle, make reasonable provision for or otherwise resolve its
liabilities and obligations, including the establishment of an
adequate contingency reserve; and the uncertain macroeconomic and
political environment.
In addition to forward-looking statements regarding the proposed
Plan of Dissolution, 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, Merrimack’s rights to receive
payments related to certain milestone events or whether such
milestones will be achieved, if at all, or whether Ipsen and
Elevation Oncology will resume efforts under the remaining programs
for which milestone payments may occur. Such forward-looking
statements involve substantial risks and uncertainties that could
cause Merrimack’s 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: positive information about pre-clinical and
early-stage clinical trial results does not ensure that later stage
or larger scale clinical trials will be successful. For example,
these additional indications for which milestone payments could
occur may not demonstrate promising therapeutic effect or
appropriate safety profiles in current or later stage or larger
scale clinical trials as a result of known or as yet unanticipated
side effects. The results achieved in later stage trials may not be
sufficient to meet applicable regulatory standards or to justify
further development. Problems or delays may arise prior to the
initiation of planned clinical trials, during clinical trials or in
the course of developing, testing or manufacturing that could lead
Ipsen and Elevation Oncology and their partners and collaborators
to fail to initiate or to discontinue development. Even if later
stage clinical trials are successful, unexpected concerns may arise
from subsequent analysis of data or from additional data. Obstacles
may arise or issues may be identified in connection with review of
clinical data with regulatory authorities. Regulatory authorities
may disagree with Ipsen and Elevation Oncology’s view of the data
or require additional data or information or additional studies. In
addition, the planned timing of initiation and completion of future
clinical studies, if any, are subject to the ability of each of
Ipsen and Elevation Oncology, respectively, to enroll patients,
enter into agreements with clinical trial sites and investigators,
and overcome technical hurdles and other issues related to the
conduct of the trials for which each of them is responsible.
Additionally, each of Ipsen and Elevation Oncology are subject to
the risk that they may not successfully commercialize these
development programs. In addition, press releases and other public
statements by Ipsen and Elevation Oncology may contain
forward-looking statements. 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 Annual
Report on Form 10-K filed with the SEC on March 9, 2023, any
subsequent quarterly report on Form 10-Q filed by Merrimack and the
other reports Merrimack files with the SEC.
Important Additional Information and Where to Find It
This press release is for informational purposes only. It is
neither a solicitation of a proxy, an offer to purchase, nor a
solicitation of an offer to sell shares of the Company. In
connection with the proposed dissolution of the Company and the
Plan of Dissolution, the Company intends to file with the SEC a
proxy statement and other relevant materials. BEFORE MAKING ANY
VOTING DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS
THERETO, ANY OTHER SOLICITING MATERIALS AND ANY OTHER DOCUMENTS TO
BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED DISSOLUTION
OF THE COMPANY, THE PLAN OF DISSOLUTION AND RELATED MATTERS, AND/OR
INCORPORATED BY REFERENCE IN THE PROXY STATEMENT WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
MERRIMACK, THE PROPOSED AND DISSOLUTION OF THE COMPANY, AND THE
PLAN OF DISSOLUTION AND RELATED MATTERS. Stockholders may obtain a
free copy of the proxy statement and the other relevant materials
when they become available, and any other documents filed by the
Company with the SEC, at the SEC's website at http://www.sec.gov or
on the “Investors – SEC Filings” section of Merrimack’s website at
www.merrimack.com. These documents will be available free of
charge.
Participants in the Solicitation
Merrimack and its executive officers and directors may be deemed
to be participants in the solicitation of proxies from its
stockholders with respect to the proposed dissolution of the
Company, the Plan of Dissolution and related matters, and any other
matters to be voted on at the special meeting of stockholders.
Information regarding the names, affiliations and direct or
indirect interests, by security holdings or otherwise, of such
directors and executive officers in the solicitation will be
included in the proxy statement (when available). Additional
information regarding such directors and executive officers, and
other important Company information, are included in Merrimack’s
Annual Report on Form 10-K for the year ended December 31, 2022,
which was filed with the SEC on March 9, 2023.
Information regarding the persons who may, under SEC rules, be
deemed participants in the solicitation of proxies of Merrimack’s
stockholders in connection with the proposed dissolution of the
Company, the Plan of Dissolution and related matters and any other
matters to be voted upon at the special meeting will be set forth
in the proxy statement
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version on businesswire.com: https://www.businesswire.com/news/home/20240213967043/en/
Tim Surgenor ir@merrimack.com
Merrimack Pharmaceuticals (NASDAQ:MACK)
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