Merrimack shares tumble as jobs and CEO go
- Merrimack shares tumbled on the news of 22% jobs cuts and the immediate resignation of CEO Robert Mulroy. The major restructuring will cut more than $200 million in its expected costs over the next two years.
- The resulting cash savings should fund the company for at least 12 months, taking it through to late 2017, dependent on milestones, reimbursements and profit from marketed cancer drug Onivyde (irinotecan liposome injection).
- Interim President and CEO Gary Crocker, previously the chair of the board, will lead the company through its change of direction to focus on systems biology-derived oncology products.
This is the end of a challenging year for Merrimack, whose shares have already dropped year-on-year by around a third. This was assisted by a steep slide in August 2016, when the company posted a $50.8 million loss for the second quarter of 2016 due to interest expenses and R&D costs. Added to this, sales of Onivyde haven't been quite what the company hoped, reaching $12.9 million against a consensus of $17 million, in the second quarter.
However, the search is on for a new CEO as Robert Mulroy steps down effective immediately in the company's newly announced restructuring. The aim is to tighten the company's focus on systems biology-related cancer therapeutics, including its launched product, Onivyde. The company also has a pipeline of six preclinical and clinical stage antibody-based drug candidates in hard to treat cancers such as metastatic pancreatic cancer and advanced HER2+ breast cancer.
Onivyde won approval from the FDA in 2015 for the treatment of metastatic pancreatic cancer, as the first new drug in this area for a number of decades. While it carries a black box warning for severe adverse effects, it still faces little competition on or near the market, which is a plus point for the company. The "reduction in personnel will not impact the commercial team or the execution of Onivyde's commercial launch and label expansion," said the company in a press release.
While the company hasn't confirmed the number of job cuts, it will likely affect some 90 employees. The savings from the job cuts should kick in quickly, with plans to have the positions eliminated by December 3, 2016. "This major restructuring will allow us to strategically align our pipeline with our core capabilities and prioritize ongoing clinical development efforts while improving our financial flexibility," said Interim president and CEO Gary Crocker.
- Merrimack Pharmaceuticals Statement
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