Merrimack cuts 60% of jobs, narrows R&D focus
- Merrimack Pharmaceuticals executives said Wednesday the pharma will lay off more than half of its employees as part of a restructuring plan that will also end research on its leading drug candidate.
- CEO Richard Peters said on a third quarter earnings call the restructuring would cut about 60% of the company's employees, emphasizing the need to reduce operational costs and extend its cash runway into 2022 with the reductions. The job cuts are expected to start immediately and trim headcount down to about 27 people by February 2019, continuing a steady stream of workforce reductions in past years.
- While Merrimack stock opened flat, it climbed up 12% by around noon Wednesday. This year has been a tough one for Merrimack, as its stock value has been cut in more than half since January.
Merrimack has struggled with its R&D progress since it sold off its cancer treatment Onivyde (irontecan) to the French drug company Ipsen in January 2017, as shown by its consistently shrinking workforce and pipeline.
Absorbing a $12.3 million net loss in the third quarter, Merrimack had about $85 million in cash and equivalents at the end of September. With yet another workforce reduction planned, the Cambridge, Massachusetts-based company anticipates one-time termination costs of between $1.5 million and $1.8 million.
Last month, the pharma announced MM-121, its lead drug candidate, flopped in a Phase 2 trial in non-small cell lung cancer and ended the study early. Now, Peters said Merrimack is ending all research on MM-121, including a separate ongoing Phase 2 study.
Instead, Merrimack will embrace a narrower pipeline centered around MM-310, an antibody-directed nanotherapeutic intended to reduce the toxicity of docetaxel, a cancer chemotherapy.
MM-310 has its own problems, however. Merrimack disclosed Wednesday it is adjusting the dosing regimen in Phase 1 testing after three of the first 14 patients dosed developed Grade 3 peripheral neuropathy. By lengthening the time between doses, the company hopes to improve tolerability and plans to give a safety update in early 2019.
The glory days of 2014 and 2015, when Merrimack enjoyed an expanding workforce and a share price north of $100 apiece, are long gone. The stock opened Wednesday with a $4.25 share price.
Yet, its executives asserted Wednesday the restructuring will give Merrimack a path forward.
By reducing operating expenses and expanding its cash run rate, the pharma can hang around to potentially collect milestone payments from Ipsen for the cancer treatment it sold off last year, which could be up to $450 million.
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