Merrimack Pharmaceuticals (NASDAQ:MACK) and Baxter (NYSE:BAX) have climbed into bed on MM-398, Merrimack's drug candidate for the treatment of metastatic pancreatic cancer, in a licensing deal worth nearly $1 billion. Baxter and MACK entered into an exclusive license and collaboration agreement for MM-398 (nanoliposomal irinotecan), with Baxter gaining rights to all potential indications of MM-398 ex-U.S. & Taiwan in exchange for $100 million up front and $870 million in regulatory and sales-based milestones. MACK is entitled to tiered royalties on ex-U.S. sales of MM-398, and continues to own U.S commercialization rights.
MACK was up 25% (+$1.75) in early trading on Wednesday. The $100 million upfront payment works out to about $1.00 per share for Merrimack, but the market sees this licensing deal as meaningful validation for the product. Merrimack plans to file a New Drug Application with the FDA by the end of the year.
MM-398 is the chemotherapeutic irinotecan wrapped in a nanoliposomal capsule to improve absorption in tumors. In May of this year, a phase 3 study of the candidate produced positive results in a historically difficult-to-treat patient population – pancreatic cancer patients who had previously received gemcitabine-based therapy. MM-398 combined with 5-fluorouracil and leucovorin generated an overall survival of 6.1 months, a 1.9 month improvement over the 4.2 months produced by the control arm in the study (5-FU and leucovorin alone) (p=0.012). As a monotherapy, MM-398 had a 4.9 month median overall survival but did not achieve a statistically significant advantage compared to the control arm.
Merrimack will receive $100 million up front and is eligible for $120 million in regulatory milestone payments related to the first pancreatic cancer indication (refractory patients), and $280 million in development and regulatory milestone payments for a second pancreatic cancer indication (presumably the first-line setting). Merrimack is also eligible to receive $220 million in future development and regulatory milestone payments related to two unnamed indications. Merrimack has the potential to receive $250 million in sales milestones, as well as tiered royalties on sales of MM-398 outside of the U.S. an Taiwan.
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