Christmas comes early for Merrimack’s bankers


Armed with US approval for its lead agent, Onivyde, Merrimack was hardly going to give up on the somewhat more disappointing follow-up, seribantumab.

But until now it had been assumed that commercialising the latter hinged on finding a new partner for it. So yesterday’s plan to move solo with seribantumab could ring alarm bells, especially as it is backed by a new $175m of debt; at a time of super-low interest rates the fact that Merrimack will be paying an 11.5% coupon in this financing spells bonanza for the investment bankers.

True, biotech sentiment is waning as 2015 draws to a close, but some companies are still able to raise significant amounts in equity. The fact that Merrimack presumably could not – thus necessitating going down the punitive debt financing route – says a lot about the realistic prospects for seribantumab.

The agent, an anti-Her3 MAb, has already failed in ovarian, lung and breast cancers, leading Sanofi last year to hand back the ex-US rights it had picked up in 2009.

In the meantime, of course, Merrimack scored a success of sorts with Onivyde. That liposomal formulation of itinotecan is now licensed to Baxalta, and got US approval in pancreatic cancer on the strength of a meagre, 1.9-month survival benefit, and not without a black box safety warning (Up is down for Relypsa and Merrimack, October 23, 2015).

Sellside expectations are for Onivyde sales to hit $758m in 2020, so it seems unlikely that Merrimack will be left cash-strapped; the group had $62m in the bank at the end of the third quarter.

However, yesterday’s $175m private debt placement shows how much the group needed a short-term cash injection. The senior notes, due in 2022, carry a coupon of 11.5% at a time when US interest rates are near zero, and safer corporates are able to raise significant amounts of debt financing priced in the 2-5% range.

The new cash will partly be used to refinance existing debt, of which Merrimack had $126m at the end of the third quarter. But it will also fund development of seribantumab, as well as MM-302, an anti-Her2 MAb-doxorubicin conjugate in phase III for breast cancer.


Merrimack’s problem with seribantumab was that Sanofi had been unconvinced about a proposed path forwards based on subgroup analyses, and Merrimack will now pursue this plan on its own.

An ongoing open-label phase II trial in heregulin-positive NSCLC patients is to be amended to change its primary endpoint measure from progression-free to overall survival. This, Merrimack claims, will allow the study to serve as the basis for a filing; enrolment is also to be increased from 120 to 280 patients.

Heregulin is a Her2/Her3 signalling growth factor that is expressed in some tumours, and Merrimack cites meta-analyses looking at subgroups of patients with certain biomarkers as supportive of taking seribantumab forward.

The company opened down 2% this morning, a lukewarm response to its plan to retain full ownership of a commercial oncology drug. Then again, a punitive debt raise and the lack of any other partner willing to take the bait is a lukewarm endorsement of seribantumab.

Study Trial ID
280 heregulin-positive pts; open label NCT02387216

To contact the writer of this story email Jacob Plieth in London at or follow @JacobPlieth on Twitter

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