- Merrimack Pharmaceuticals hit the reset button on Jan. 8, announcing the sale of rights to its pancreatic cancer drug Onivyde along with associated commercial and manufacturing infrastructure to the French Ipsen for $575 million upfront.
- In addition, Merrimack plans to substantially reduce its workforce to roughly 80 employees from a headcount of about 400 in October. The Cambridge-based company had previously said it would cut staff by 22% as part of a strategic review initiated that month.
- Per the deal, Ipsen gains rights to all current and future indications for Onivyde (irinotecan liposome injection), which is approved in the U.S. for second-line treatment of metastatic pancreatic cancer in combination with fluorouracil and leucovorin.
With Onivyde, Ipsen picks up a recently approved drug for a particularly challenging cancer, expanding its oncology portfolio and U.S. footprint at the same time.
Onivyde has struggled, however, since winning approval in October 2015. Despite the high unmet need in pancreatic cancer, sales of Onivyde totaled a lackluster $37 million over the first nine months of 2016.
Data from Onivyde's pivotal study was also mixed, showing a two-month improvement in overall survival when used in combination with fluorouracil and leucovorin. Onivyde monotherapy failed to show improvement over the fluorouracil/leucovorin arm.
Winning approval for first-line use would greatly expand Onivyde's potential market, and Merrimack currently has a Phase 2 trial in that setting ongoing. But a read-out, originally expected in the first quarter of 2017, has been pushed back.
Still, wholly owned, approved cancer drugs up for sale don't come along every day. Ipsen lined up another $540 million in milestones based on approval of Onivyde in other indications, including $225 million for a green light in first-line pancreatic cancer.
The French drugmaker expects the deal to be accretive to operating margin and earnings per share from 2018 onwards.
For Merrimack, selling Onviyde and cutting its workforce by 80% recasts the company and largely completes the strategic review. Merrimack, which has bled cash over the course of the year, will use proceeds of the sale to pay down $175 million in senior secured notes, fund pipeline development through 2019 and return a cash dividend to shareholders.
Merrimack will now focus on three clinical assets: MM-121, MM-141 and MM-310. Of the three, MM-121 is the most advanced and is in Phase 2 testing in non-small cell lung cancer, but has failed previous trials.
Ipsen also will acquire rights to generic doxorubicin HCl liposome injection and will inherit a licensing agreement with Shire for ex-U.S. sales of Onivyde.
No word was given, however, on a potential successor to former Merrimack CEO Robert Mulroy, who resigned in October at the outset of the review. Chairman of the Board Gary Crocker remains interim CEO.