Company Overview
| Company Name |
MERRIMACK PHARMACEUTICALS INC |
| Company Address |
ONE KENDALL SQUARE
SUITE B7201
CAMBRIDGE, MA 02139 |
| Company Phone |
617-441-1000 |
| Company Website |
www.merrimackpharma.com |
| CEO |
Robert J. Mulroy |
| Employees (as of 2/29/2012) |
218 |
| State of Inc |
DE |
| Fiscal Year End |
12/31 |
| Status |
Priced (3/29/2012) |
| Proposed Symbol |
MACK |
| Exchange |
Nasdaq National Market |
| Share Price |
$7.00 |
| Shares Offered |
14,300,000 |
| Offer Amount |
$100,100,000.00 |
| Total Expenses |
$2,350,000.00 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
92,396,254 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
9/25/2012 |
| Quiet Period Expiration |
5/8/2012 |
| CIK |
0001274792 |
We estimate that the net proceeds from our issuance and sale of 14,300,000
shares of our common stock in this offering will be approximately $93.5
million, based on the initial public offering price of $7.00 per share,
after deducting underwriting discounts and commissions and estimated
offering expenses payable by us but prior to the payment of accrued dividends
on our series B convertible preferred stock. If the underwriters exercise
their over-allotment option in full, we estimate that the net proceeds from
this offering will be approximately $107.5 million.
As of December 31, 2011, we had cash and cash equivalents of approximately
$50.5 million. We will use approximately $4.3 million of the net proceeds
from this offering to pay accrued dividends on our series B convertible
preferred stock. We currently estimate that we will use the balance of the
net proceeds from this offering, together with our cash and cash equivalents
as of December 31, 2011, as follows:
. approximately $30.0 million to $40.0 million to fund our ongoing clinical
program for MM-398, including approximately $12.0 million to $16.0 million of
external costs for our Phase 3 clinical trial in metastatic pancreatic cancer,
and to seek marketing approval and begin commercialization activities for
MM-398 in the United States;
• approximately $16.0 million to $22.0 million to fund our ongoing clinical
program for MM-111;
• approximately $14.0 million to $18.0 million to fund our ongoing clinical
program for MM-302;
• approximately $11.0 million to $15.0 million to fund our ongoing clinical
program for MM-151;
• approximately $30.0 million to $45.0 million to fund other research and
development efforts, including beginning human clinical trials for new
compounds; and
• the balance, if any, to fund working capital, capital expenditures and
other general corporate purposes, which may include the acquisition or
licensing of other products, businesses or technologies.
This expected use of the net proceeds from this offering and our existing
cash and cash equivalents represents our intentions based upon our current
plans and business conditions. The amounts and timing of our actual
expenditures may vary significantly depending on numerous factors, including
the progress of our development and commercialization efforts, the status of
and results from clinical trials, as well as any collaborations that we may
enter into with third parties for our product candidates, and any unforeseen
cash needs. As a result, our management will retain broad discretion over the
allocation of the net proceeds from this offering. We have no current
understandings, agreements or commitments for any material acquisitions or
licenses of any products, businesses or technologies.
Based on our planned use of the net proceeds from this offering and our
existing cash and cash equivalents described above, we expect that such funds
will be sufficient to enable us to complete enrollment in the Phase 3 clinical
trial of MM-398 in metastatic pancreatic cancer.
However, it is possible that we will not achieve the progress that we expect
because the actual costs and timing of development, particularly clinical
trials, are difficult to predict, subject to substantial risks and delays
and often vary depending on the particular indication and development
strategy. Sanofi is responsible for all development and manufacturing costs
under our collaboration for the development and commercialization of MM-121.
We do not expect that the net proceeds from this offering and our existing
cash and cash equivalents will be sufficient to enable us to fund the
completion of development of any of our product candidates.
Pending our use of the net proceeds from this offering, we intend to invest
the net proceeds in a variety of capital preservation investments, including
short-term, investment grade, interest bearing instruments and U.S. government
securities.
The biotechnology and pharmaceutical industries are characterized by rapidly
advancing technologies, intense competition and a strong emphasis on
proprietary products. While we believe that our Network Biology technologies,
integrated research, clinical and manufacturing capabilities, development
experience and scientific knowledge provide us with competitive advantages, we
face potential competition from many different sources, including major
pharmaceutical, specialty pharmaceutical and biotechnology companies, academic
institutions and governmental agencies and public and private research
institutions. Any product candidates that we successfully develop and
commercialize will compete with existing therapies and new therapies that may
become available in the future.
Many of our competitors may have significantly greater financial resources and
expertise in research and development, manufacturing, preclinical testing,
conducting clinical trials, obtaining regulatory approvals and marketing
approved products than we do. Mergers and acquisitions in the pharmaceutical,
biotechnology and diagnostic industries may result in even more resources being
concentrated among a smaller number of our competitors. These competitors also
compete with us in recruiting and retaining qualified scientific and management
personnel and establishing clinical trial sites and patient registration for
clinical trials, as well as in acquiring technologies complementary to, or
necessary for, our programs. Smaller or early stage companies may also prove to
be significant competitors, particularly through collaborative arrangements
with large and established companies.
The key competitive factors affecting the success of all of our product
candidates, if approved, are likely to be their efficacy, safety, convenience,
price, the effectiveness of companion diagnostics in guiding the use of related
therapeutics, the level of generic competition and the availability of
reimbursement from government and other third party payors.
Our commercial opportunity could be reduced or eliminated if our competitors
develop and commercialize products that are safer, more effective, have fewer
or less severe side effects, are more convenient or are less expensive than any
products that we may develop. Our competitors also may obtain FDA or other
regulatory approval for their products more rapidly than we may obtain approval
for ours. In addition, our ability to compete may be affected because in many
cases insurers or other third party payors seek to encourage the use of generic
products. There are many generic products currently on the market for the
indications that we are pursuing, and additional products are expected to
become available on a generic basis over the coming years. If our therapeutic
product candidates are approved, we expect that they will be priced at a
significant premium over competitive generic products.
The most common methods of treating patients with cancer are surgery, radiation
and drug therapy, including chemotherapy and targeted drug therapy. In many
cases, these drugs are administered in combination to enhance efficacy. Some of
these drugs are branded and subject to patent protection, and others are
available on a generic basis, including the active ingredients in MM-398 and
MM-302. Many of these approved drugs are well established therapies and are
widely accepted by physicians, patients and third party payors. In general,
although there has been considerable progress over the past few decades in the
treatment of solid tumors and the currently marketed therapies provide benefits
to many patients, these therapies all are limited to some extent in their
efficacy and frequency of adverse events, and none of them are successful in
treating all patients. As a result, the level of morbidity and mortality from
solid tumor cancers remains high.
These products in development may provide efficacy, safety, convenience and
other benefits that are not provided by currently marketed therapies. As a
result, they may provide significant competition for any of our product
candidates for which we obtain market approval.
Company Description
We are a biopharmaceutical company discovering, developing and preparing to
commercialize innovative medicines paired with companion diagnostics for the
treatment of serious diseases, with an initial focus on cancer. Our mission
is to provide patients, physicians and the healthcare system with
the
medicines, tools and information to transform the approach to care from one
based on the identification and treatment of symptoms to one focused on the
diagnosis and treatment of illness through a more precise mechanistic
understanding of disease. We seek to accomplish our mission by applying
our proprietary systems biology-based approach to biomedical research,
which we call Network Biology. Our vision is to apply Network Biology to
become a global healthcare enterprise that is founded on leading science
and driven to deliver integrated healthcare solutions that improve both
the quality of patient outcomes and the efficiency of care.
Network Biology is an interdisciplinary approach to drug discovery and
development that enables us to build functional and predictive computational
models of biological systems based on quantitative, kinetic, multiplexed
biological data. It provides our scientists with insights into how the complex
molecular interactions that occur within cell signaling pathways, or networks,
regulate cell decisions and how dysfunction within these networks leads to
disease. We apply Network Biology throughout the research and development
process, including for target identification, lead compound design and
optimization, diagnostic discovery, in vitro and in vivo predictive
development and the design of clinical trial protocols. We believe that drug
discovery and development using Network Biology is more efficient and
productive than traditional approaches.
We currently have five targeted therapeutic oncology candidates in clinical
development. Additionally, we have multiple product candidates in preclinical
development and an active Network Biology driven discovery effort. We own
global commercialization rights to all of our product candidates other than
rights in Taiwan to MM-398 and worldwide rights to MM-121, which we have
partnered with Sanofi and have a right to co-promote in the United States.
Our most advanced product candidates are:
. MM-398: MM-398 is a novel, stable nanotherapeutic encapsulation, or
enclosed sphere carrying an active drug, of the marketed chemotherapy drug
irinotecan. MM-398 recently achieved its primary efficacy endpoints in Phase
2 clinical trials in pancreatic and gastric cancer. In an open label, single
arm Phase 2 clinical trial of MM-398 as a monotherapy in 40 metastatic
pancreatic cancer patients who had previously failed treatment with
gemcitabine, patients treated with MM-398 achieved median overall survival
of 22.4 weeks. Additionally, 20% of the patients in this Phase 2 trial
survived for more than one year, and we observed a disease control rate,
meaning patients exhibited stable disease or partial or complete response
to treatment, of 47.5% at six weeks. There are currently no approved
treatments for gemcitabine refractory metastatic pancreatic cancer, nor is
there a consensus on standard of care treatment for such patients.
We are conducting a pivotal Phase 3 clinical trial of MM-398 for the treatment
of patients with metastatic pancreatic cancer who have previously failed
treatment with gemcitabine. The trial is expected to enroll approximately
270 patients worldwide and is designed to compare the efficacy of MM-398
as a monotherapy against the combination of the chemotherapy drugs
fluorouracil, or 5-FU, and leucovorin, a regimen often used by physicians
to treat this patient population. We believe that MM-398 has potential uses
in a number of other indications, including colorectal cancer, lung cancer,
gastric cancer and glioma. There are multiple ongoing Phase 1 and Phase 2
clinical trials of MM-398.
In July 2011, the U.S. Food and Drug Administration, or FDA, granted MM-398
orphan drug designation for the treatment of pancreatic cancer. In the United
States, orphan drug designation is granted to a drug intended to treat a rare
disease or condition, which is generally defined as a disease or condition
that affects fewer than 200,000 individuals in the United States. If MM-398
receives the first FDA approval for the disease for which it has such
designation, it is entitled to orphan drug exclusivity, which means that the
FDA may not approve any other applications to market the same drug for the
same indication, except in limited circumstances, for seven years. In
September 2011, the European Medicines Agency also granted MM-398 orphan
medicinal product designation for the treatment of pancreatic cancer.
. MM-121: MM-121 is a fully human monoclonal antibody that targets ErbB3, a
cell surface receptor, or protein attached to the cell membrane that mediates
communication inside and outside the cell, that our Network Biology approach
identified as a potentially important target in a range of cancers. A
monoclonal antibody is a type of protein normally produced by cells of the
immune system that binds to just one epitope, or chemical structure, on a
protein or other structure. MM-121 is designed to inhibit cancer growth
directly, restore sensitivity to drugs to which a tumor has become resistant
and delay the development of resistance of a tumor to other agents. In
collaboration with Sanofi, we are testing MM-121 in combination with both
chemotherapies and other targeted agents across a wide spectrum of solid
tumors, including lung, breast and ovarian cancers.
We partnered MM-121 with Sanofi after we initiated Phase 1 clinical
development of this product candidate. Sanofi paid us an upfront license fee
of $60 million and is responsible for all of the development and manufacturing
costs under the collaboration. We are entitled to tiered royalties and
aggregate clinical, regulatory and sales milestones of up to $470 million, of
which we have already received $20 million and expect to receive an additional
$5 million in the first quarter of 2012 for achieving three clinical
milestones.
• MM-111: MM-111 is a bispecific antibody designed to target cancer cells
that are characterized by overexpression of the ErbB2 cell surface receptor,
also referred to as HER2. A bispecific antibody is a type of antibody that
is able to bind simultaneously to two distinct proteins or epitopes. Our
Network Biology approach identified that ligand-induced signaling through
the complex of ErbB2 (HER2) and ErbB3 is a more powerful and widespread
promoter of tumor growth and survival than previously appreciated. We believe
that MM-111 is potentially applicable across a broad range of solid tumors.
We are conducting multiple Phase 1 clinical trials of MM-111 in monotherapy
and combination therapy settings.
. MM-302: MM-302 is a nanotherapeutic encapsulation of doxorubicin with
attached antibodies that are designed to target MM-302 to cells that
overexpress the ErbB2 (HER2) receptor. We believe that MM-302 has the
potential to retain the safety profile of liposomal doxorubicin, in particular
with respect to cardiac safety, and achieve better efficacy than either free
doxorubicin or liposomal doxorubicin in ErbB2 (HER2) positive tumors. We are
conducting a Phase 1 clinical trial of MM-302 in patients with advanced ErbB2
(HER2) positive breast cancer.
• MM-151: MM-151 is an oligoclonal therapeutic consisting of a mixture of
three fully human monoclonal antibodies designed to bind to non-overlapping
epitopes of the epidermal growth factor receptor, or EGFR. EGFR is also know
as ErbB1. An oligoclonal therapeutic is a mixture of two or more distinct
monoclonal antibodies. We have designed MM-151 to block signal amplification
that occurs within the ErbB cell signaling network, which we believe may
result in greater efficacy than currently marketed EGFR (ErbB1) inhibitors.
We are conducting a Phase 1 clinical trial of MM-151 in patients with solid
tumors.
We are developing companion diagnostics for use with each of our therapeutic
oncology product candidates. We use Network Biology in our programs to
identify biomarkers and develop them into companion diagnostic agents. We
believe that companion diagnostics will allow us to improve the efficiency
and productivity of our clinical development and enhance the efficacy and
pharmacoeconomic benefit of our therapeutics.
We manufacture drug substance for use in our clinical trials and research
and development efforts for all of our product candidates using current good
manufacturing practices, or cGMP, at our 4,000 square foot multi-product
facility. We have capacity to produce Phase 2 material for our antibody
product candidates and commercial material for our nanotherapeutics.
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We were incorporated under the laws of the Commonwealth of Massachusetts in
1993 under the name Immtek, Inc. We changed our name to Atlantic
BioPharmaceuticals, Inc. in 1995. In 2001, we acquired Merrimack
Pharmaceuticals, Inc., a Delaware corporation, and changed our name to
Merrimack Pharmaceuticals, Inc. In October 2010, we reincorporated in the
State of Delaware. As a result, we are now a Delaware corporation with the
name Merrimack Pharmaceuticals, Inc.
Our principal executive offices are located at One Kendall Square, Suite
B7201, Cambridge, Massachusetts 02139 and our telephone number is
(617) 441-1000. Our website address is www.merrimackpharma.com.