On Sunday, Merrimack announced its plans to sell off its commercial asset ONIVYDE® and generic version of DOXIL® to Ipsen group in a deal valued around $1B. In this deal, Merrimack retains up to $33M in future milestones pursuant to its exclusive license with Shire, but will sell commercialization rights in the U.S. and its licensing agreement with Shire.
Merrimack will receive $575M at closing and up to $450M in approval-based milestone payments. These milestones include $225M upon FDA approval in front-line pancreatic cancer, $150M for approval in SCLC, and $75M for approval in any other indication.
Merrimack plans to use the cash infusion to settle its debt and fund development through 1H19. They will also return $200M to its shareholders in a dividend equal to around $1.54/share and 100% of the $450M in approval-based milestones.
If you owned shares in MACK last Friday, this deal will provide a nice return with the $1.54/share dividend.
If this deal goes through, it effectively turns Merrimack into an early-stage biotech with a favorable balance sheet. This is a large departure from a commercial stage company and buyout candidate. Since our initial thesis placed emphasis on ONIVYDE® as the major value driver going forward, a re-evaluation of MM-121, MM-141, and MM-310 is prudent before making an investment.
Institutions own >65%, so it remains to be seen whether this deal gets approved or not.
Merrimack Pharmaceuticals (MACK) is one of Amp Biotech Research's quarterly picks for Q1 2017. Amp is a biotech research firm that publishes a quarterly list of companies with attractive valuations and near-term catalysts. To see all of Amp's picks for Q1 2017, go to www.ampbioresearch.com.
Find the press release here: http://investors.merrimackpharma.com/releasedetail.cfm?ReleaseID=1006997