What's In The Cards For Merrimack (MACK) In Q4 Earnings?

Merrimack Pharmaceuticals, Inc. (NASDAQ:MACK) is expected to report fourth-quarter 2017 results on Mar 7. Last quarter, Merrimack beat bottom-line expectations by 78.72%.

Merrimack’s shares have tumbled 63.3% over a year compared with the industry’s decline of 2.1%.

Let’s see how things are shaping up for the company this quarter.

Factors to Consider

Merrimack divested its only marketed product, Onivyde, in April 2017, to Ipsen due to a disappointing launch and subsequent unimpressive sales. The company received $575 million in cash from the asset sale.

Merrimack is also entitled to receive up to $450 million in additional regulatory approval-based milestone payments as part of the deal.

The company lowered debt and invested in the development of its oncology pipeline.1

Merrimack is now focused on the development of three pipeline candidates — MM-121/seribantumab, MM-141/istiratumab and MM-310 (solid tumor).

MM-141 is currently being evaluated in a phase II study, CARRIE, for metastatic pancreatic cancer, which completed enrollment in June 2017. The company expects to report data in the first half of 2018. Moreover, MM-121 is currently being evaluated in a phase II study, SHERLOC in advanced non-small cell lung cancer patients who are heregulin positive. Top-line data is expected in the second half of 2018.

Merrimack initiated another phase II study during the quarter, SHERBOC, to evaluate MM-121 in breast cancer.

In October 2017, the FDA granted orphan drug designation to MM-121 for NSCLC study.

The company may issue a preliminary update related to the studies during the fourth-quarter earnings call.

Surprise History

Merrimack’s track record has been dismal so far. The company missed estimates in three of the trailing four quarters while beating in one. Merrimack has a four-quarter average negative earnings surprise of 51.59%.

Earnings Whispers

Our proven model does not conclusively show that Merrimack is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 28 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Merrimack’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Merrimack Pharmaceuticals, Inc. Price and EPS Surprise

Merrimack Pharmaceuticals, Inc. Price and EPS Surprise | Merrimack Pharmaceuticals, Inc. Quote

Stocks That Warrant a Look

Here are a couple of health care stocks that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Gemphire Therapeutics (NASDAQ:GEMP) is expected to release fourth quarter results on Mar 21. The company has an Earnings ESP of +6.62% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology (NASDAQ:PBYI) is scheduled to release fourth quarter results on Mar 1. The company has an Earnings ESP of +2.02% and a Zacks Rank #3.

Atara Biotherapeutics (NASDAQ:ATRA) is expected to release fourth quarter results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3.

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