With a big corporate split looming ahead, Baxter ($BAX) has stepped in to pick up the ex-U.S. rights to Merrimack Pharmaceuticals' lead cancer therapy, paying $100 million in an upfront fee and committing up to $870 million in additional milestones for the late-stage treatment.
Baxter, which is reportedly considering a move to Boston after spinning out its biopharma division under the name Baxalta, is adding MM-398 to its drug portfolio. The experimental therapy is made up of the chemo drug irinotecan wrapped in a nanoliposomal capsule to provide extended circulation in patients, amping up its effect on cancer. And while it failed to provide a significant improvement in survival rates as solo therapy, it did hit the goal line in a combination approach to a very tough type of cancer.
Merrimack's stock shot up 23% in premarket trading this morning.
Back in May, Cambridge, MA-based Merrimack ($MACK) reported that MM-398 combined with 5-FU and leucovorin registered a 6.1 month rate of survival in a late-stage study targeting advanced pancreatic cancer, compared to 4.2 months for the combo alone. All the metastatic patients in the study had been treated with gemcitabine. Those numbers reflect a marginal improvement for a group of very sick patients, but they hit the mark on the study's primary endpoint, leaving Merrimack planning an application at the FDA before the end of this year.
|Merrimack CEO Robert Mulroy|
"This is a population that hasn't had a new drug in something like 40 years," Merrimack CEO Bob Mulroy tells FierceBiotech, adding that "this (deal) provides the capital for us to commercialize on our own in the U.S."
Baxter, he notes, is exactly the right partner for a number of reasons, including their position in the Asian market. And the timing is right. With Baxter's therapeutics group splitting off, he says, "they're going to really put a huge focus on oncology."
The deal is a big one for Merrimack, which experienced a string of setbacks before trumpeting the success of the Phase III program. The biotech struggled to complete its IPO in 2012, raising cash for the late-stage effort. Then a slate of mid-stage clinical failures for MM-121 prompted Sanofi to wash its hands of their partnership. Now the biotech is relying on MM-398 to restore some lost luster. And Merrimack is retaining U.S. rights to the drug, planning to gain an approval for itself while advancing new programs for this treatment against other types of cancer.
The numbers break down like this: In addition to the upfront Merrimack can earn $120 million in regulatory milestones for the first cancer indication and $280 million in development and regulatory milestones for a second pancreatic cancer indication. Then there's $220 million in prize money for two other indications and $250 million in sales milestones. And the biotech can earn royalties on the overseas sales.
Merrimack has a staff of 270 right now. The biotech has added its own manufacturing capability for the drug and has been hiring up on the commercial side, says Mulroy. And more hires will be made going into next year, as the regulatory timeline on a potential approval becomes more clear.
Once in business on its own next year, the newly independent Baxalta will have sales of $6 billion, trade under the symbol $BXLT and push a pipeline strategy concentrated heavily on bleeding disorders, particularly hemophilia. Last year the total R&D budget at the company hit $1.25 billion, a substantial amount but not close to the top 10 pharma R&D budgets in the industry. John Orloff, a biopharma vet who recently migrated from a troubled Merck Serono R&D group--where he was head of clinical development--is heading up the R&D side of the business under CEO Ludwig Hantson.
- here's the press release