Merrimack Pharma takes shot at $172.5M IPO with cancer contenders

Cancer drug developer Merrimack Pharmaceuticals has decided to tread in the cool IPO waters. The Cambridge, MA-based firm said on Friday that it wanted to raise as much as $172.5 million in a public debut, on the strength of its experimental targeted cancer drugs and partnership with French drug giant Sanofi.

The company, founded in 1993, says that its strategy is to develop cancer drugs against specific growth drivers of tumors with companion diagnostics. Sanofi shelled out $60 million upfront to Merrimack to co-develop its lead antibody drug, called MM-121, which targets ErbB3 receptors on cells and is believed to play a role in cancer growth in a variety of tumors. Another top contender in the firm's pipeline is MM-398, which is a nano-encapsulated version of an approved chemotherapy drug that is expected to enter Phase III clinical trials for patients with pancreatic cancer by the end of this year. The company wants to trade on the Nasdaq under the ticker "MACK."

Like most other IPO candidates in biotech before it, Merrimack is asking investors to make a bet on its future prospects--as the firm has no product revenue sales and loses millions of dollars per year. The biotech had an accumulated deficit of $285.1 million as of March 31, according to an SEC filing. And the firm appears to be years away from having any product revenue. While Merrimack hasn't yet disclosed how much it wants to sell its share for in its proposed IPO, previous biotechs that have completed such offerings like Ironwood and Aveo have had to settle for lower IPO prices than the firms initially sought.

Still, Merrimack has some of the makings of a potential public biotech. It's got a high-profile partnership with a Big Pharma in Sanofi, four experimental drugs in clinical trials, and piece of the action in the always-hot field of oncology. The IPO market has been shrill toward biotechs with similar prospects in the past, but we'll see how public investors react to Merrimack's proposal in the months to come. Its backers such as Credit Suisse First Boston, Fidelity Investments, TPG-Axon Partners and others have millions riding on the proposed IPO's success.

- here's the company's SEC filing for the IPO
- check out the Wall Street Journal's report
- read Reuters' article