Actionable news
0
All posts from Actionable news
Actionable news in MACK: Merrimack Pharmaceuticals, Inc.,

2016 Off To A Good Start For Merrimack

Summary

Merrimack posted a mixed Q1 report with a revenue miss and an EPS beat.

Onivyde's progress is encouraging, and growth is likely to accelerate in 2H 2016.

Pipeline progressing nicely as well.

Cash burn is a concern, and additional dilution is possible, but shouldn't be substantial.

Note conversion announcement likely having a negative impact on the share price, and the weakness presents an opportunity to add to position.

Merrimack (NASDAQ:MACK) is off to a good start in 2016. Onivyde's sales are up 133% over Q4 to $10 million, and the drug was added to the NCCN clinical practice guidelines as a category one treatment option for post-gem metastatic pancreatic cancer at the end of the quarter. Awareness is rising and is comparable to Abraxane's launch and favorable to other launch benchmarks. The company also announced the conversion of notes to the tune of 12.4 million shares, which effectively eliminated around $13 million in cash interest payments over the next few years and which has reduced long-term debt by $64 million. This is, perhaps, the main reason behind today's selloff and likely a good buying opportunity for long-term-oriented investors. The other possible reason for the selloff is the cash burn - the company is likely to need additional financing towards the end of 2016, but it should not be substantial and does not represent a significant risk for investors.

Onivyde off to a good start in 2016

Onivyde's Q1 revenues were $10 million, a 133% increase over Q4 2015. This was right in the middle of my rough estimate range of $8 million to $12 million. When adjusted for the timing of the launch (the company recorded just over two months of sales in Q4), the actual sequential increase is more in the 55% to 60% range: average monthly sales of $2.1 million in Q4 2015 and $3.33 million in Q1 2016. Here are the most significant data points:

  • Awareness is high at 84% and comparable to Abraxane's launch and favorable to other launch benchmarks.
  • The company is shipping the product to 20 to 25 new institutions a week. 550 unique facilities have ordered Onivyde since launch, more than double the Q4 2015 number.
  • The company is making significant headway with formularies. The number of cites which have Onivyde on their formulary has more than doubled sequentially. There is still significant room for improvement here, and this should be an important growth driver for Onivyde going forward.
  • The regimen of Onivyde plus 5-FU and leucovorin was added to the NCCN clinical practice guidelines as a category one treatment option for post-gem metastatic pancreatic cancer at the end of Q1 and is the only category one...

More