Cambridge's Merrimack Slashes 80% of Workforce, Sells Off Cancer Drugs in $1.025 Billion Deal

Cambridge's Merrimack Slashes 80% of Workforce, Sells Off Cancer Drugs in $1.025 Billion Deal January 9, 2017
By Mark Terry, Breaking News Staff

Cambridge, Mass.-based Merrimack Pharmaceuticals announced it was selling off some of its assets to France-based Ipsen for a deal that could hit $1.025 billion, refocusing its pipeline programs, and completing laying off 80 percent of its staff.

Ipsen is paying Merrimack an upfront fee of $575 million in cash. Another $450 million is possible in regulatory approval-based milestone payments. As part of the deal, Ipsen acquires Onivyde for pancreatic cancer, as well as U.S. commercialization rights and the licensing agreement with Shire plc . It also picks up Merrimack’s generic version of doxorubicin hydrochloride (HCL) liposome injection (generic DOXIL) for ovarian cancer, AIDS-related Kaposi’s sarcoma and multiple myeloma.

Merrimack also announced that it was refocusing its pipeline on MM-121, MM-141 and MM-310. MM-121 (seribantumab) is a human monoclonal antibody that binds to the HER3 receptor and targets HRG+ cancers. It is currently in the SHERLOC trial for HRG+ non-small cell lung cancer patients in combination with docetaxel or pemetrexed.

MM-141 (istiratumab) is a bispecific tetravalent antibody and potent inhibitor of the PI3K/AKT/mTOR pathway that targets IGF1-R and HER3. The drug is in a Phase II trial, CARRIE, for metastatic pancreatic cancer patients with high levels of free IGF1 in combination with nab-paclitaxel and gemcitabine in the front-line setting.

MM-310 is projected to start human Phase I trials to evaluate safety and efficacy this quarter. It is an antibody directed nanotherapeutic (AND) that contains a prodrug of docetaxel that targets the EphA2 receptor. It is hoped to be effective in prostate, ovarian, bladder, gastric and lung cancers.

Also, the company began restructuring its workforce in October 2016. By the close of the Ipsen deal, the company will have reduced staff by 80 percent from 400 employees to about 80.

“The agreement to sell Onivyde and generic Doxil, and our decision to focus on MM-121, MM-141 and MM-310, conclude a comprehensive process that our Board conducted to maximize value for stockholders and confirms the strength of our technology and the power of systems biology,” said Gary Crocker, Merrimack’s board chairman and interim president and chief executive officer. “With this transformative step, Merrimack is moving forward as a more focused research and development company targeting three clinical stage assets with outstanding value potential. The transaction proceeds will allow Merrimack to realign its capital structure and fund the pipeline into the second half of 2019, as well as return cash to stockholders in the form of the special dividend.”

Merrimack plans to return 100 percent of the funds received of the $450 million and milestone payments to stockholders. It indicates that, “Prior to any tax impact, gross proceeds for achieving these milestones equates to approximately $3.46 per outstanding share of common stock, based on the number of Merrimack outstanding shares today. The milestones are composed of: $225 million for U.S. Food and Drug Administration (FDA) approval in first-line pancreatic cancer, $150 million for FDA approval in small cell lung cancer and $75 million for FDA approval in any third indication.”

Merrimack is currently trading for $3.60.

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