Type of information: Product acquisition
Compound: Onivyde® (nanoliposomal irinotecan injection), generic Doxil®
Company: Ipsen (France) Merrimack Pharmaceuticals (USA - MA)
Therapeutic area: Cancer - Oncology
Type agreement: product acquisition
Action mechanism: topoisomerase I inhibitor. Onivyde® - MM-398 (irinotecan liposome injection) is a nanoliposomal encapsulation of the chemotherapeutic irinotecan. MM-398 has demonstrated extended circulation in comparison to free irinotecan in the clinical setting. The activated form of irinotecan is SN-38, which functions by inhibiting topoisomerase I (an essential enzyme involved in DNA transcription and replication) and promoting cell death. In 2014, Merrimack and Baxter International's biopharmaceutical business (Baxalta) entered into an exclusive licensing agreement to develop and commercialize MM-398 outside of the United States and Taiwan. PharmaEngine holds the rights to commercialize MM-398 in Taiwan. Merrimack markets Onivyde® in the United States.
In June 2016 Shire completed its combination with Baxalta. Through the combination, Shire gained an oncology portfolio including Oncaspar® (pegaspargase), a marketed biologic treatment for acute lymphocytic leukemia, and late-stage, partnered products such as pacritinib, an investigational oral kinase inhibitor for the treatment of patients with myelofibrosis, and Onivyde® (irinotecan liposome injection) for the treatment of patients with metastatic pancreatic cancer. Shire is responsible for the development and commercialization of Onivyde® - outside of the United States and Taiwan.
- • On March 30, 2017, Merrimack Pharmaceuticals announced that, at its Special Meeting of Stockholders held today, its stockholders voted to approve the asset sale with Ipsen under which Merrimack will sell Onivyde®, including U.S. commercialization rights and its licensing agreement with Shire; an its generic version of doxorubicin hydrochloride (HCI) liposome injection ("generic Doxil®") marketed in the United States as Doxil® and advanced under a development, license and supply agreement with Actavis.
- • On January 8, 2017, Merrimack Pharmaceuticals announced that it has entered into a definitive asset purchase and sale agreement with Ipsen for a transaction valued at up to $1.025 billion , plus up to $33 million in net milestone payments retained by Merrimack pursuant to Merrimack's exclusive licensing agreement with Shire, under which Merrimack will sell to Ipsen its first commercial product Onivyde®, including U.S. commercialization rights and its licensing agreement with Shire. Merrimack will also sell to Ipsen its generic version of doxorubicin hydrochloride (HCI) liposome injection ("generic Doxil®") marketed in the United States as DOXIL® and advanced under a development, license and supply agreement with Actavis. The transaction is expected to be completed in the first quarter of 2017.
Merrimack also announced the completion of its previously announced strategic pipeline review resulting in the identification of the three most promising clinical programs to focus its development efforts on going forward. In assessing the clinical and financial prioritization of its programs, Merrimack determined that MM-121, MM-141 and MM-310 are the programs with the highest probability of success and the highest return on investment.
As a result of the transaction, the refocused pipeline and the previously implemented restructuring initiatives announced in October 2016 , Merrimack will have a significantly reduced operating expense structure and a capital structure that is appropriately aligned with the Company's new focus. Upon completing the Ipsen transaction and refocusing effort, the Company will have approximately 80 employees; this represents a reduction of 80% from approximately 400 employees prior to implementing the restructuring in October 2016 .
- Under the terms of the agreement, which has been unanimously approved by the Merrimack Board of Directors, Merrimack will receive from Ipsen : $575 million in cash at closing; and up to $450 million in additional regulatory approval-based milestone payments.
- Merrimack will also retain the rights to receive net milestone payments pursuant to Merrimack's exclusive licensing agreement with Shire for the ex- U.S. development and commercialization of Onivyde® for up to $33 million . The $33 million of net milestone payments includes payments related to Onivyde® of $18 million from the sale of Onivyde® in two additional major European countries, $5 million related to the sale1 of Onivyde® in the first major non-European, non-Asian country and $10 million for the first patient dosed in the planned small cell lung cancer (SCLC) trial. The Company believes these near-term payments are highly probable based on current data and expects they will be received in 2017.
Merrimack intends to use the $575 million upfront payment, net of tax reserves and transaction-related and other costs, to invest $125 million to develop the Company's streamlined oncology pipeline, such that Merrimack will be able to fund itself into the second half of 2019. The company will extinguish the $175 million in outstanding Senior Secured Notes due in 2022, plus approximately $20 million of costs associated with the redemption, such that in addition to a significantly reduced operating expense structure, the Company's capital structure will be appropriate for a development stage biopharmaceutical company; and
Merrimack will also return at least $200 million to its stockholders through a special cash dividend, which equates to approximately $1.54 per outstanding share of common stock, based on the number of Merrimack outstanding shares today. The Board of Directors plans to approve the special cash dividend after the closing of the transaction, and Merrimack expects it will be paid soon thereafter. The Company will announce a record date and ex-dividend date in due course.
Merrimack will also return to its stockholders 100% of the amounts received of the up to $450 million in additional regulatory approval-based milestone payments for additional indications for Onivyde® in the U.S. , net of taxes owed related to the receipt of these milestones. Prior to any tax impact, gross proceeds for achieving these milestones equates to approximately $3.46 per outstanding share of common stock, based on the number of Merrimack outstanding shares today. The milestones are composed of: $225 million for FDA approval in first-line pancreatic cancer, $150 million for FDA approval in small cell lung cancer and $75 million for FDA approval in any third indication.