Merrimack Pharmaceuticals, Inc.
Q1 2015 Earnings Call Transcript

Published: 7 May 2015

[Operator:]

Good day ladies and gentlemen, and welcome to the Merrimack Pharmaceuticals First Quarter 2015 Investor Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s call is being recorded. I would now like to turn the conference over to Geoff Grande with Investor Relations. Sir, you may begin.

[Geoff Grande:]

Thanks, Shannon. Good afternoon everyone and thank you for joining us. Today, we'll review our first quarter 2015 financials and provide an update on our clinical progress. A press release detailing this information issued a short while ago can be found in the investors’ section of our website at merrimackpharma.com. This call is being broadcast live and will be archived on our website for six weeks. I'm joined today by Bob Mulroy, our President and CEO; and Bill Sullivan, our CFO. We’ll end the formal portion of the call with time for Q&A. Before we begin, I need to remind you that during this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations and plans, clinical development timelines, the potential success of our product, and financial projections. These statements involve risks and uncertainties which are described in the risk factors section of the most recent Form 10-K and the other reports we file with the SEC, which are available online at sec.gov. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on any obligation to do so. With that, I'll turn the call over to Bob.

[Bob Mulroy:]

Thank you, Geoff. It’s a pleasure to speak with you all today and update you on our progress over the past couple of months. For those of you who are new to the company, Merrimack is a fully integrated cancer company built on the scientific foundations and systems engineering to better understand the dynamics that drive a multifaceted disease. Our goal is to translate those insights into best-in-class precision medicines and integrate targeted therapeutics and diagnostics into solutions that meet the challenges of treating cancer. We are currently advancing a robust clinical pipeline of therapeutics paired with companion diagnostics derived from our systems insight that seek to address three big problem areas in cancer

[Bill Sullivan:]

Thanks, Bob, and good afternoon to everyone. Our first quarter 2015 financials are included in our press release, which was distributed a short while ago. Net loss for the first quarter of 2015 was $34.4 million and consisted of $14.8 million in collaboration revenues, $44.9 million in operating expenses, and a $4.4 million loss from other expenses. The $14.8 million in collaboration revenues consisted entirely of revenue recognized under our proportional performance model associated with our Baxter collaboration. Approximately $35.7 million or 80% of operating expenses consisted of research and development expenses. Of this, $23.4 million or 66% related to clinical stage programs, and $10.3 million or 29% related to pre-clinical, general research, and discovery costs. The other $9.2 million or 20% of operating expenses consisted of general and administrative expenses. The $4.4 million loss from other expenses was primarily related to interest expense on our term loan with Hercules and Merrimack’s convertible senior notes. Approximately $1.9 million of interest expense was imputed non-cash expense related to the conversion feature of our senior notes. Looking at our balance sheet, cash and cash equivalents and available for sale securities decreased $32.3 million during the first quarter of 2015. Turning to our financial guidance. Merrimack expects to be able to fund operations into 2016 to unrestricted cash and cash equivalents and available for sale securities of $91.8 million as of March 31, 2015, anticipated cost sharing reimbursements from Baxter, and the anticipated receipt of $66.5 million of net MM-398 milestone in 2015. Any payments received from additional business development would further extend our cash runway. At this point, I will turn the call back over to Geoff.

[Geoff Grande:]

Thanks, Bill. And before we wrap up, I’d like to mention that we will be attending a few upcoming conferences including the Jefferies 2015 Global Healthcare Conference on June 2 in New York; the Cantor Fitzgerald Healthcare Conference on July 8 in New York; and the BMO Capital Markets Biotech Corporate Access Day on July 28 in Boston. We hope to see you at one of these events. And with that, operator, we would like to open the line for any questions.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Eric Schmidt of Cowen and Company. You may begin.

[Unidentified Analyst:]

Hi, guys. This is Jeff on for Eric. Thanks for taking my questions and congrats on all the progress. First question is on the initiation of front-line metastatic pancreatic cancer for MM-398, what are some of the hurdles to further initiation or when might we see the initiation take place?

[Bob Mulroy:]

Hi, Jeff and thanks for your question. I think that we are working through the pretty classic process to get the trial together. Having developed a protocol with our partner, you need to go out in the world and get investigator buying a support. You need to work through all our logistics. We are expecting getting a trial started and we are in the middle of that process, and we are hopeful that in the pretty near future we will be able to provide the details on the study and talk about timing.

[Unidentified Analyst:]

Okay, thanks. And you mentioned that Baxter is pursuing other indications for MM-398 in other markets. Have you disclosed or Baxter has disclosed what other indication that those might be?

[Bob Mulroy:]

So, not other indications. Their intent is to file the existing post gem pancreatic cancer indication in other territories. So, under our agreement with Baxter, we will be commercializing in the U.S. and they will be commercializing in the rest of the world. What we announced earlier this week is that, Baxter has submitted the application for approval in the European Union. Obviously, there’s a large number of territories left and they will be pursuing those in the time coming ahead.

[Unidentified Analyst:]

Okay. And just last one from me. For MM-141, I believe the data disclosed at ACR has some GI tolerability issues. Can you just describe how manageable that is and just something that keep an eye on moving forward? Thanks.

[Bob Mulroy:]

So, I am not aware of any GI tolerability issues, but from the dataset that stood out from the investigators point of view, but happy to get to you in touch after the call with the folks who’ve conducted the study, and we could follow-up specifically on anything that you might have seen that you wanted to follow-up on.

[Unidentified Analyst:]

Okay. Thanks.

[Operator:]

Thank you. I’m showing no further questions at this time. I’d like to turn the call back over to Geoff Grande for closing remarks.

[Geoff Grande:]

Great. Thank you everyone for joining us today. We look forward to updating you again next quarter.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day.