Ipsen S.A. up-front deal worth $575 million to acquire Merrimack Pharmaceuticals Inc (NASDAQ:MACK) oncology business is a combination of convenience on both entities. In return for a much-sought cash injection the struggling entity, Merrimack, gives its French counterpart an easier course into the U.S. oncology market, complete with manufacturing facilities, sales force and the slightly overcast family silver in the form of drug Onivyde.
Getting a U.S.-approved oncology offering, and more prominently, the infrastructure around it, also assists Ipsen rebalance a set where its main care processes have underperformed, making a drag on the specialty pharma business.
The deal brings some promising news for Merrimack shareholders, who have recently witnessed their shares decline close to historic lows following a slew of bad news. Lately, Merrimack reported the discontinuation of its Phase 2 Hermione trial of “MM-302” in Her2-positive metastatic breast cancer following a futility assessment.
Earlier in October, the firm launched a restructuring plan that saw it swing the axe on nearly a quarter of its staff, execute a $200 million cost-cutting plan, and report the exit of its Chief Executive Officer Robert Mulroy.
Together with the October plan change, the group also proclaimed changing of the portfolio, in an attempt to support the pipeline in the wake of poor sales of its prime drug, Onivyde. The drug was originally approved in 2015 for metastatic pancreatic cancer, however, its sales have underperformed, chalking up only $14.5 million in the third quarter. With its rough offer, Ipsen, and its new CEO David Meek, must consider that the French group can plan better for strong sales of the product.
Given Onivyde’s less-than-impressive statistics in enhancing overall survival, it is going to be tough, even for a fresh and enthusiastic management team. As per EvaluatePharma consensus of banks following Merrimack, Onivyde sales are projected at $619 million by 2022. This deal seems to be mostly about an easy way for Ipsen to venture into the U.S. oncology market.