Merrimack Reports Fourth Quarter and Full-Year 2016 Financial Results
Key Recent Events
- As announced on
January 8, 2017 , Merrimack entered into an asset purchase and sale agreement with Ipsen S.A. under which Merrimack will sell ONIVYDE® and its generic version of doxorubicin hydrochloride (HCI) liposome injection to Ipsen for up to$1.025 billion , plus up to$33.0 million in net milestone payments retained by Merrimack pursuant to Merrimack's license and collaboration agreement with Shire. A special meeting of Merrimack's stockholders is scheduled forMarch 30, 2017 to consider and vote on the asset sale. Merrimack anticipates completing the asset sale shortly after approval of the asset sale at the special meeting. - Merrimack also announced on
January 8, 2017 the conclusion of a comprehensive pipeline review by its Board of Directors, which resulted in the identification of the three most promising clinical programs to focus its development efforts on going forward: MM-121, MM-141 and MM-310. - Merrimack appointed Dr.
Richard Peters as President and Chief Executive Officer, effectiveFebruary 6, 2017 .Dr. Peters succeededGary Crocker , Chairman of the Board, who was serving as Interim President and Chief Executive Officer prior toDr. Peters' appointment.
"This is an exciting and important time for Merrimack as we are refocusing into an earlier-stage, R&D-focused biopharmaceutical company," said
Fourth Quarter and Full Year 2016 Financial Results
The following summarizes Merrimack's financial results from the year ended
- Aggregate research and development and selling, general and administrative expenses for the year ended
December 31, 2016 , when calculated in accordance with GAAP, were$241.6 million . This amount includes$35.5 million of milestone payments made to PharmaEngine. This corresponds to aggregate research and development and selling, general and administrative expenses, excluding milestone payments to PharmaEngine, a non-GAAP financial measure, of$206.1 million for the year endedDecember 31, 2016 . As a result of Merrimack's various cost control measures, these amounts are within the lowered GAAP and non-GAAP guidance ranges previously provided by Merrimack; - Product revenues from the commercial sale of ONIVYDE, net of discounts, allowances and reserves, were
$53.1 million for the year endedDecember 31, 2016 , compared to$4.3 million for the year endedDecember 31, 2015 ; - License and collaboration revenues were
$87.1 million for the year endedDecember 31, 2016 , compared to$85.0 million for the year endedDecember 31, 2015 . This amount includes$40.0 million of substantive milestones achieved during the year endedDecember 31, 2016 under Merrimack's license and collaboration agreement with Shire, compared to$20.0 million of substantive milestones achieved under this collaboration during the year endedDecember 31, 2015 ; - Restructuring expenses were
$5.9 million for the year endedDecember 31, 2016 and were related to the previously-announced 22% reduction in headcount that occurred inOctober 2016 as part of a major corporate restructuring with the objective of prioritizing Merrimack's research and development on a focused set of systems biology-derived oncology products and strengthening its financing runway; - Interest expense was
$43.6 million for the year endedDecember 31, 2016 , compared to$19.2 million for the year endedDecember 31, 2015 . This$24.4 million increase 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 inApril 2016 as well as interest incurred on its senior secured notes that were issued inDecember 2015 ; and - Net loss attributable to Merrimack for the year ended
December 31, 2016 was$151.7 million , or$1.21 per share, compared to a net loss attributable to Merrimack of$148.0 million , or$1.33 per share, for the year endedDecember 31, 2015 .
The following summarizes Merrimack's financial results from the quarter ended
- Product revenues from the commercial sale of ONIVYDE, net of discounts, allowances and reserves, were
$15.8 million for the quarter endedDecember 31, 2016 , compared to$14.5 million for the quarter endedSeptember 30, 2016 . This represents an increase of$1.3 million , or 9%, over the prior quarter; - License and collaboration revenues were
$44.1 million for the quarter endedDecember 31, 2016 , compared to$12.4 million for the quarter endedSeptember 30, 2016 . This$31.7 million increase is primarily due to the achievement of$30.0 million of substantive milestones during the fourth quarter under Merrimack's license and collaboration agreement with Shire; - Aggregate research and development and selling, general and administrative expenses for the quarter ended
December 31, 2016 , when calculated in accordance with GAAP, were$79.2 million compared to$50.1 million for the quarter endedSeptember 30, 2016 . This represents an increase of$29.1 million , or 58%. The majority of this increase was related to$25.5 million of milestone payments owed to PharmaEngine in the fourth quarter of 2016; - Restructuring expenses were
$5.0 million for the quarter endedDecember 31, 2016 ; and - Net loss attributable to Merrimack for the quarter ended
December 31, 2016 was$32.4 million , or$0.25 per share, compared to a net loss attributable to Merrimack of$30.1 million , or$0.23 per share, for the quarter endedSeptember 30, 2016 .
A table reconciling aggregate research and development and selling, general and administrative expenses, excluding milestone payments 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.
2017 Financial Outlook
Upon the closing of the asset sale, Merrimack will receive a
Conference Call and Webcast
Merrimack will host a live conference call and webcast today,
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 71929949. 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.
About Merrimack
Merrimack Pharmaceuticals is a biopharmaceutical company based in Cambridge,
Additional Information about the Transaction and Where to Find It
This disclosure is being made in respect of the asset sale contemplated by the asset purchase and sale agreement between Merrimack and Ipsen. In connection with the proposed asset sale, Merrimack recently filed a proxy statement and other relevant material with the Securities and Exchange Commission (the "
Participants in the Solicitation
Merrimack and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in connection with the special meeting. Information about Merrimack's directors and executive officers is included in Merrimack's Annual Report on Form 10-K for the year ended
Forward Looking Statements
This release contains forward-looking statements of Merrimack that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this release are forward-looking statements. Forward looking statements can be identified by the use of the words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," and similar expressions. Merrimack's forward-looking statements include, among others, statements about potential milestone payments, Merrimack's expectations with respect to the consummation of the proposed transaction with Ipsen, its ability to fund its operations, including continued investment in its research and development pipeline, its ability to return cash to stockholders and the potential benefit and utility of its product candidates. Actual events or results may differ materially from those described in this release due to a number of risks and uncertainties. Risks and uncertainties include, among other things, risks related to the satisfaction of the conditions to closing the asset sale (including the failure to obtain stockholder approval); whether Merrimack's expenses are as predicted; and those risk factors discussed in Merrimack's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed with the SEC on November 9, 2016 and its other filings with the SEC. The forward-looking statements in this release represent Merrimack's views as of the date of this release. Merrimack anticipates that subsequent events and developments will cause its views to change. However, while it may elect to update these forward-looking statements at some point in the future, it has no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing Merrimack's views as of any date subsequent to the date of this release.
Consolidated Statements of Operations and Comprehensive Loss Data (unaudited) | |||||||||||
Three Months Ended |
Years Ended | ||||||||||
(in thousands, except per share amounts) |
2016 |
2015 |
2016 |
2015 | |||||||
Revenues: |
|||||||||||
Product revenues, net |
$ |
15,752 |
$ |
4,328 |
$ |
53,064 |
$ |
4,328 | |||
License and collaboration revenues |
44,057 |
17,090 |
87,119 |
84,930 | |||||||
Other revenues |
1,431 |
— |
4,090 |
— | |||||||
Total revenues |
61,240 |
21,418 |
144,273 |
89,258 | |||||||
Costs and expenses: |
|||||||||||
Cost of revenues |
3,319 |
46 |
6,912 |
46 | |||||||
Research and development expenses |
54,961 |
44,740 |
160,917 |
160,988 | |||||||
Selling, general and administrative expenses |
24,206 |
19,335 |
80,729 |
57,795 | |||||||
Restructuring expenses |
5,047 |
— |
5,856 |
— | |||||||
Total costs and expenses |
87,533 |
64,121 |
254,414 |
218,829 | |||||||
Loss from operations |
(26,293) |
(42,703) |
(110,141) |
(129,571) | |||||||
Other income and expenses, net |
(7,334) |
(5,365) |
(43,377) |
(18,216) | |||||||
Net loss |
(33,627) |
(48,068) |
(153,518) |
(147,787) | |||||||
Net (loss) income attributable to non-controlling interest |
(1,178) |
(242) |
(1,778) |
170 | |||||||
Net loss attributable to Merrimack |
$ |
(32,449) |
$ |
(47,826) |
$ |
(151,740) |
$ |
(147,957) | |||
Other comprehensive income |
2 |
— |
— |
74 | |||||||
Comprehensive loss |
$ |
(32,447) |
$ |
(47,826) |
$ |
(151,740) |
$ |
(147,883) | |||
Net loss per share available to common stockholders - basic and diluted |
$ |
(0.25) |
$ |
(0.41) |
$ |
(1.21) |
$ |
(1.33) | |||
Weighted-average common shares used in computing net loss per share available to common stockholders - basic and diluted |
129,806 |
115,595 |
125,334 |
111,356 |
Selected Balance Sheet Data (unaudited) | |||||||
| |||||||
(in thousands) |
2016 |
2015 | |||||
Cash and cash equivalents |
$ |
21,524 |
$ |
185,606 | |||
Working capital |
(30,787) |
97,648 | |||||
Total assets |
81,483 |
234,880 | |||||
Total liabilities |
334,142 |
418,569 | |||||
Total stockholders' deficit |
(251,120) |
(183,928) |
Selected Cash Flow Data (unaudited) |
|||||||
Years Ended | |||||||
(in thousands) |
2016 |
2015 | |||||
Net cash used in operating activities |
$ |
(170,241) |
$ |
(105,356) | |||
Net cash (used in) provided by investing activities |
(3,257) |
75,110 | |||||
Net cash provided by financing activities |
9,416 |
180,164 | |||||
Net (decrease) increase in cash and cash equivalents |
$ |
(164,082) |
$ |
149,918 |
This press release presents information regarding aggregate research and development and selling, general and administrative expenses, excluding milestone payments to PharmaEngine, which is a financial measure not calculated in accordance with GAAP. Merrimack is providing non-GAAP information that excludes one-time milestone payments 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 milestone payments to PharmaEngine are entirely offset by milestone payments 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 milestone payments to PharmaEngine, to establish budgets and operational goals and to manage Merrimack's business.
The following is a reconciliation of GAAP amounts to non-GAAP amounts:
Reconciliation to General and Administrative Expenses, Excluding Milestone Payments to PharmaEngine (unaudited) | |||
(in millions) |
Year Ended | ||
Aggregate research and development and selling, general and administrative expenses (GAAP measure) |
$ |
241.6 | |
Less: expenses related to one-time milestone payments to PharmaEngine |
(35.5) | ||
Aggregate research and development and selling, general and administrative expenses, excluding milestone payments to PharmaEngine (non-GAAP measure) |
$ |
206.1 |
CONTACT:
617-441-7602
ggrande@merrimack.com
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