Merrimack is set to lay off 60% of its staff and halt development of its lead candidate in response to setbacks in the clinic. The major restructuring is intended to keep Merrimack operating and raking in milestones from Ipsen while it looks into strategic alternatives.
Little has gone right for Merrimack since it sold its approved pancreatic cancer drug Onivyde to Ipsen and reduced its headcount by around 80% last year. The deal transformed Merrimack back into a clinical-phase biotech with three key assets and a headcount of 72, down from more than 400 early in 2016. But the new strategy soured when two of the three assets failed midphase tests.
Merrimack weatherd the first failure but has initiated a significant change in direction in the wake of last month’s setback. Having seen MM-121 fail in non-small cell lung cancer, Merrimack is pulling the plug on a phase 2 trial of the anti-HER3 antibody in metastatic breast cancer. Merrimack figured it would struggle to raise cash for a breast cancer phase 3 unless the phase 2 was a runaway success.
The axing of MM-121 is one of many changes underway at Merrimack. By February, Merrimack expects to reduce its workforce by 60%. Management has begun the cutbacks by eliminating all open positions and will continue by cutting deep into its headcount. Merrimack’s workforce composition at the end of January, when 48 of its 72 employees worked in R&D, suggests the cuts will hit scientists and leave the company with fewer than 30 staff.
Merrimack expects the changes to add more than two years to its financial runway, extending it out from the first quarter of 2020 to deep into 2022.
“The intent there is to really preserve and enhance the ability of Merrimack to be in a position to capture the long-term Ipsen milestones which we had indicated we intend to return to our shareholders,” Merrimack CEO Richard Peters said on a conference call with investors.
Merrimack is in line to receive milestone payments of up to $450 million if Ipsen wins approvals for Onivyde in new indications. Onivyde is in phase 2 trials in the big-ticket indications.
While waiting for the potential milestones, Merrimack is looking into strategic alternatives. Peters said all options are up for discussion. No timeline for the process has been revealed publicly.
Merrimack’s clinical trial woes mean it has a limited range of assets to attract potential buyers. After the restructuring, Merrimack will be focused on two preclinical programs and one remaining clinical asset, MM-310, which has been through its own difficulties.
A phase 1 trial of MM-310 in solid tumors was due to deliver safety data by the end of the year, but a red flag has forced Merrimack to revise the study and pushback the readout. Three of the 14 patients enrolled in the dose-escalation trial suffered emerging grade 3 peripheral neuropathy after receiving multiple rounds of treatment. The finding led Merrimack to change the dosing schedule, setting the trial back.