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What's in the Cards for Merrimack (MACK) in Q3 Earnings?

Merrimack Pharmaceuticals, Inc. MACK is expected to report third-quarter 2017 results around Nov 8, before market opens. Last quarter, Merrimack missed bottom-line expectations by 57.14%.

Merrimack’s share price has decreased 71.3% year to date against the industry’s gain of 3.9%.


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

Factors to Consider

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

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

The company reduced its outstanding debt and invested in the development of its oncology pipeline.

Merrimack is now focused on the development of 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).

MM-141 is currently being evaluated in a phase II study, CARRIE, for metastatic pancreatic cancer, which completed enrollment in June. The company expects to report data in the first half of 2018. Moreover, MM-121 is currently in a phase II study, SHERLOC in NSCLC patients with heregulin positive. Merrimack plans to initiate another phase II study, SHERBOC, to evaluate MM-121 in breast cancer.

Subsequent to the quarter in October, the FDA granted orphan drug designation to MM-121 for a lung cancer study.

The company may provide a preliminary update related to the studies on its earnings call.

Surprise History

Merrimack’s track record has been dismal so far with a four-quarter average negative earnings surprise of 65.44%. The company has missed estimates thrice in the four trailing quarters while beating the same only once.

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 stand at a loss of $1.88. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Merrimack’s has Zacks Rank #4 (Sell).

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

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.

Agenus Inc. AGEN is scheduled to release results on Nov 7 with an Earnings ESP of +8.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cidara Therapeutics, Inc. CDTX is scheduled to release results on Nov 8. The company has an Earnings ESP of +16.06% and a Zacks Rank #2.

Regenxbio Inc. RGNX is scheduled to release results on Nov 8. The company has an Earnings ESP of +4.23% and a Zacks Rank #2.

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