Merrimack (MACK) Incurs Narrower-Than-Expected Loss In Q4

Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK) reported a loss of 89 cents per share in the fourth quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $1.27. The company reported a loss of $2.93 in the year-ago quarter.

Merrimack sold Onivyde and a generic version of Doxil to Ipsen in April 2017. Merrimack did not generate any revenues in the quarter as there was no marketed product.

Merrimack’s shares lost 10.3% following the release of fourth-quarter results. Shares of Merrimack have underperformed the industry so far this year. The stock tumbled 25.7% in the last six months while the industry declined 7.7%.

In the quarter, research and development expenses were down 51.6% year over year to $12.4 million due to Merrimack's refocused clinical and preclinical pipeline.

General and administrative expenses were down 57.3% year over year to $4.7 million due to reduced headcount levels and stock-based compensation

2017 Results

Loss per share for 2017 came in at $5.66 compared with $12.33 in 2016.

Pipeline Updates

With the sale of its only marketed product, the company can 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).

Data from the phase II CARRIE study, evaluating MM-141 in pancreatic cancer, is expected in the first half of 2018. MM-310 is being evaluated in a phase I study in solid tumors. Safety data and maximum tolerated dose is expected to be announced in the second half of 2018.

The company is conducting a phase II study, SHERLOC on MM-121 in non-small cell lung cancer. Enrollment in the study has been expanded to 100 from 80. Top-line data from the study is expected in the second half of 2018. In November 2017, the FDA granted orphan drug designation to the candidate for the treatment of heregulin-positive non-small cell lung cancer.

Merrimack announced that the first patient has been also dosed in phase II study, SHERBOC, for evaluating MM-121 in HER2 negative metastatic breast cancer.

Outlook

Per the company, cash and cash equivalents of $93.4 million as of Dec 31, 2017 and potential net milestone payments anticipated from Shire (NASDAQ:SHPG) will be sufficient to fund its planned operations into the second half of 2019.

Our Take

The narrower-than-expected loss in the fourth quarter was due to lower expenses. We expect investor focus on pipeline updates from the company.

Zacks Rank & Stocks to Consider

Merrimack carries a Zacks Rank #3 (Hold).

Investors interested in the health care space can consider some better-ranked stocks are Regeneron Pharmaceuticals (NASDAQ:REGN) and Ligand Pharmaceuticals (NASDAQ:LGND) . While Regeneron sports a Zacks Rank #1 (Strong Buy), Ligand carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Regeneron’s earnings per share estimates have moved up from $17.13 to $18.65 and from $20.37 to $21.56 for 2018 and 2019, respectively in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters, with an average beat of 9.15%.

Ligand’s earnings per share estimates have moved up $3.54 to $4.15 from $4.75 to $5.75 for 2018 and 2019 respectively over the last 30 days. The company delivered positive earnings surprises in three of the trailing four quarters, with an average beat of 24.88%. The company’s shares have rallied 57.2% over a year.

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