Merrimack Pharmaceuticals Announces Completion of Strategic Review, Preservation of Ipsen Milestones and Special Cash Dividend
The core driver throughout the Company's strategic review process was to optimize value for shareholders, including through the preservation of potential milestone payments that Merrimack is eligible to receive. To that end, the management team and the Board thoroughly evaluated a broad set of alternatives, including whole company transactions and asset sales. Accordingly, with the assistance of its advisors, over 100 potential companies were contacted. This process eventually narrowed the pool of interested transaction candidates to a handful of potential opportunities. The management team and the Board worked with each of these final counterparties, but ultimately determined not to move forward with any of them for a variety of reasons, including not being able to agree on acceptable terms, offering what the Board deemed to be insufficient value to Merrimack shareholders and/or not providing for the assumption of the responsibility to capture and distribute the potential long-term ONIVYDE milestones to the Company's pre-transaction shareholders.
"As a result of this extensive strategic review process, the Board has concluded that the best outcome available for our shareholders is to restructure the Company such that our cash runway could extend into 2027, when we estimate the longest-term potential
In addition to the preservation of the opportunity to receive the potential
- The execution of an asset purchase agreement on
May 28, 2019with 14ner Oncology, Inc., a newly formed biotechnology company backed by a prominent venture capital firm, to sell the Company's anti-Her3 monoclonal antibody programs, MM-121 and MM-111, for up to $58.0 millionin total consideration, consisting of $3.5 millionin upfront cash consideration and up to $54.5 millionin contingent milestone payments. The target closing date of the asset sale is June 24, 2019, and the closing is effectively contingent upon the completion of a successful equity financing by 14ner Oncology prior to closing;
- The authorization of a near-term special cash dividend of between
$16.9 million and $18.9 millionif the asset sale to 14ner Oncology closes, or between $13.4 million and $15.4 millionif the asset sale to 14ner Oncology does not successfully close. Based on the current number of shares outstanding, the dividend will be approximately $1.00 to $1.42per common share, the timing and final amount of which will be confirmed once the Company's transition costs are fully assessed;
- The discontinuation of discovery efforts on Merrimack's remaining preclinical programs, MM-201 and MM-401;
- A workforce reduction, affecting the current executive leadership team and all remaining employees, to be substantially completed by
June 28, 2019, allowing sufficient time to retain and transition new management for the Company's operations going forward, including the continued pursuit of potential acquirers for Merrimack's remaining preclinical and clinical assets; and
- A plan to reduce the size of the Company's Board of Directors to be better aligned with the nature of the Company's continuing operations, which the Company expects to implement at its next annual meeting of shareholders.
Since initiating this strategic review in
As previously disclosed, Merrimack remains eligible to receive additional contingent milestone payments resulting from Merrimack's asset sale to
- Merrimack is entitled to receive up to
$5.0 millionin milestones from Servier, triggered by Ipsenand Servier's decision to progress their ongoing multi-part clinical trial evaluating ONIVYDE in small-cell lung cancer (SCLC) into the second randomized portion of the trial focused on efficacy; and
- Merrimack is also entitled to receive up to an aggregate of
$450.0 millionin regulatory-based milestones from Ipsenconsisting of: $225.0 millionupon approval by the FDAof ONIVYDE for the first-line treatment of metastatic adenocarcinoma of the pancreas, subject to certain conditions; $150.0 millionupon approval by the FDAof ONIVYDE for the treatment of SCLC after failure of first-line chemotherapy; and $75.0 millionupon approval by the FDAof ONIVYDE for an additional indication unrelated to those described above.
In addition, subject to successfully closing the sale of its anti-Her3 programs to 14ner Oncology, Merrimack would be eligible to receive the following development, regulatory and commercial-based milestone payments:
$3.0 millionfor achievement of the primary endpoint in the first registrational clinical study of either of the transferred products;
- Up to
$16.5 millionin total payments for the achievement of various regulatory and reimbursement-based milestones in the United States, Europeand Japan; and
- Up to
$35.0 millionin total payments for achieving various cumulative worldwide net sales targets between $100 million and $300 millionfor the transferred products.
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 cash runway, anticipated achievement, receipt and distribution of milestones, a potential special cash dividend, and reductions in the Company's workforce and the size of its Board of Directors. Such forward-looking statements involve substantial risks and uncertainties that could cause Merrimack's 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, expectations for achievement of contractual milestones, 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 product candidates. 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
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