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Actionable news in MACK: Merrimack Pharmaceuticals, Inc.,

Onivyde's Successful Launch And Pipeline Developments To Drive Merrimack Higher


Onivyde’s Q4 revenue was $4.3 million after just two months on the market.

The company is focused on increasing access to Onivyde and has reached approximately 75% of targeted national and regional payers.

Onivyde is on track to penetrate a large part of the addressable market in the United States.

Reassessing the bull case with a look at the value of the pipeline and the financial outlook.

I must say that I was quite impressed with the way Merrimack (NASDAQ:MACK) is handling the Onivyde launch. As I usually do, I went through the earnings report and then headed over to Merrimack's page on Seeking Alpha to look at the Q4 conference call transcript. The information management revealed about Onivyde's first two months on the market was overwhelmingly positive. Net sales just two months into the launch were $4.3 million and the company has done a very good job with Onivyde's coverage and has already reached 10% of all patients in a short time.

Onivyde's growth should accelerate significantly over the next few quarters, which might enable the company to reach a cash flow break-even point without tapping the equity market for more funds (but raising more capital might be necessary). Of course, this would not be possible without the substantial milestone payments from Baxalta. In this article, I will analyze Onivyde's launch progress and will assess the value of the pipeline, which holds more potential than Onivyde's current indication.

Onivyde launch - excellent execution

Onivyde's revenues in Q4 were $4.3 million. A launch of a product is always hard, and this is especially the case when a company has no prior experience with drug launches. But Merrimack has handled the launch quite successfully. Here are some important facts about the launch:

  • Gross revenue was $5 million ($4.3 million net), implying a gross-to-net discount of around 13%. The company guided for gross to nets in the 10% to 15% range for 2016.
  • The company estimated that it has reached approximately 10% of addressable post-gemcitabine pancreatic cancer patients in Q4 - this translates to 300 patient starts in two months on the market (considering the estimate for 18,500 patients with post-gem cancer patients in the US). Management said that "this initial penetration compares very favorably with other oncology product launches."
  • The market Merrimack is targeting is highly concentrated and the initial target is 250 priority accounts. The company has managed to reach 80% of these priority accounts before the end of 2015.
  • Most of these priority accounts have P&T committees that evaluate whether a drug should be added to the formulary of that organization. This process can take several months, which should inhibit Onivyde's early uptake. The company has also reported solid progress on this front...