It has been about a month since the last earnings report for Merrimack Pharmaceuticals, Inc. . Shares have lost about 57.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Merrimack’s First-Quarter Loss Wider than Expected, Sells Onivyde
Merrimack reported a loss of $0.22 per share in the first quarter of 2017, wider than the Zacks Consensus Estimate of a loss of $0.07. The company had reported a loss of $0.32 in the year-ago quarter.
Merrimack sold its only marketed product, Onivyde, to Ipsen in Jan 2017 through a definitive asset purchase and sale agreement for $1 billion. Merrimack did not record any revenues in the quarter as there was no marketed product. The consensus estimate for revenues was $34.8 million.
Quarter in Detail
In the quarter, research and development expenses were down 22.9% year over year to $21.6 million due to transition of company’s focus from Onivyde to its pipeline.
General and administrative expenses were down 13.8% year over year to $5.6 million during the quarter as headcount decreased as a part of restructuring activities in the fourth quarter of 2016.
Onivyde Sale
As part of a strategic review of Merrimack’s business, the company sold all the rights to Onivyde and its generic version of Doxil injection to Ipsen S.A. The company had announced its plan to divest the asset and focus on its pipeline of cancer drugs in January. The company closed the deal on Apr 3 after receiving approval from its shareholders.
Subsequent to the quarter, in April, the company received $575 million in cash upon the close of its asset sale to Ipsen. Merrimack is eligible toreceive up to $450 million in additional regulatory approval-based milestone payments as part of the deal. Moreover, the company has retained the rights to milestone payments of up to $33 million from a previous license and collaboration agreement with Shire plc (SHPG - Research Report) for the development and commercialization of Onivyde outside the U.S.
The company used the proceeds from the sale to redeem a senior notes debt due in 2022 and invested in the development of its oncology pipeline. The board also authorized a special dividend of $140 million to its shareholders from the proceeds which is payable later this month.
Focus Shifts to Early-Stage Pipeline
With the sale of its only marketed product, the company will now focus its resources on the development of its three pipeline candidates – MM-121/seribantumab (heregulin-positive, locally advanced or metastatic non-small cell lung cancer (NSCLC), MM-141/istiratumab (pancreatic cancer) and MM-310 (solid tumor). The company has already initiated a phase I study in MM-310 in solid tumors. The data from this study is expected in 2018.
The company expects to initiate a phase II study to evaluate MM-121 for the treatment of HER2 negative metastatic breast cancer. Data from ongoing phase II studies evaluating MM-121 in non-small cell lung cancer and MM-141 in front-line metastatic pancreatic cancer is expected in 2018.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Merrimack's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Merrimack (MACK) Down 57.6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Merrimack Pharmaceuticals, Inc. . Shares have lost about 57.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Merrimack’s First-Quarter Loss Wider than Expected, Sells Onivyde
Merrimack reported a loss of $0.22 per share in the first quarter of 2017, wider than the Zacks Consensus Estimate of a loss of $0.07. The company had reported a loss of $0.32 in the year-ago quarter.
Merrimack sold its only marketed product, Onivyde, to Ipsen in Jan 2017 through a definitive asset purchase and sale agreement for $1 billion. Merrimack did not record any revenues in the quarter as there was no marketed product. The consensus estimate for revenues was $34.8 million.
Quarter in Detail
In the quarter, research and development expenses were down 22.9% year over year to $21.6 million due to transition of company’s focus from Onivyde to its pipeline.
General and administrative expenses were down 13.8% year over year to $5.6 million during the quarter as headcount decreased as a part of restructuring activities in the fourth quarter of 2016.
Onivyde Sale
As part of a strategic review of Merrimack’s business, the company sold all the rights to Onivyde and its generic version of Doxil injection to Ipsen S.A. The company had announced its plan to divest the asset and focus on its pipeline of cancer drugs in January. The company closed the deal on Apr 3 after receiving approval from its shareholders.
Subsequent to the quarter, in April, the company received $575 million in cash upon the close of its asset sale to Ipsen. Merrimack is eligible toreceive up to $450 million in additional regulatory approval-based milestone payments as part of the deal. Moreover, the company has retained the rights to milestone payments of up to $33 million from a previous license and collaboration agreement with Shire plc (SHPG - Research Report) for the development and commercialization of Onivyde outside the U.S.
The company used the proceeds from the sale to redeem a senior notes debt due in 2022 and invested in the development of its oncology pipeline. The board also authorized a special dividend of $140 million to its shareholders from the proceeds which is payable later this month.
Focus Shifts to Early-Stage Pipeline
With the sale of its only marketed product, the company will now focus its resources on the development of its three pipeline candidates – MM-121/seribantumab (heregulin-positive, locally advanced or metastatic non-small cell lung cancer (NSCLC), MM-141/istiratumab (pancreatic cancer) and MM-310 (solid tumor). The company has already initiated a phase I study in MM-310 in solid tumors. The data from this study is expected in 2018.
The company expects to initiate a phase II study to evaluate MM-121 for the treatment of HER2 negative metastatic breast cancer. Data from ongoing phase II studies evaluating MM-121 in non-small cell lung cancer and MM-141 in front-line metastatic pancreatic cancer is expected in 2018.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Merrimack Pharmaceuticals, Inc. Price and Consensus
Merrimack Pharmaceuticals, Inc. Price and Consensus | Merrimack Pharmaceuticals, Inc. Quote
VGM Scores
At this time, Merrimack's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.