• FDA Approval Triggers $225 Million Milestone Payment from Ipsen to Merrimack
  • Merrimack Expects to Hold Special Meeting of Stockholders to Approve Plan of Dissolution in May 2024
  • Following Approval of Plan of Dissolution, Merrimack Expects to Issue a Liquidating Dividend Currently Estimated to be Between $14.65 and $15.35 per Share in the Late Spring or Early Summer

CAMBRIDGE, MA, USA I February 13, 2024 I Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK) (“Merrimack” or the “Company”) reported that Ipsen, SA (“Ipsen”) issued a press release today announcing the U.S. Food and Drug Administration has approved the supplemental new drug application for Onivyde® (irinotecan liposome injection) plus 5 fluorouracil/leucovorin and oxaliplatin (NALIRIFOX) as a first-line treatment for people living with metastatic pancreatic ductal adenocarcinoma (mPDAC).

Under the terms of the 2017 Asset Purchase Agreement between Ipsen and Merrimack (the “Ipsen Agreement”), previously approved by Merrimack’s stockholders, this U.S. Food and Drug Administration approval triggers a $225 million milestone payment from Ipsen to Merrimack which is due on or before March 29, 2024.

“Today’s announcement is the culmination of nearly seven years of clinical trials and regulatory approval efforts by Ipsen following its 2017 purchase of the Onivyde technology from Merrimack. The Company has received several payments from the Ipsen Agreement including: a $575 million payment in 2017, a $5.7 Million working capital adjustment payment later that year, and a $5 million milestone payment in 2019” said Gary Crocker, Chairman of Merrimack’s Board of Directors. “The Board of Merrimack plans to hold a Special Meeting of Stockholders to approve a plan for a corporate dissolution and followed by a distribution of the proceeds to our stockholders from this new $225 million milestone payment, plus residual cash, net of corporate taxes and interest charges accruing under IRS installment sale rules, and other expenses.”

Merrimack’s Board of Directors has evaluated the likelihood of receiving additional milestone payments under the Ipsen Agreement and from the 2019 Agreement with Elevation Oncology (the “Elevation Agreement”) and has concluded that it is unlikely that any additional milestone payments from either agreement will become payable. Based on this analysis, Merrimack expects to hold a special meeting of stockholders by May of 2024 to seek approval for the adoption of a Plan of Dissolution including issuance of a liquidating dividend after the special meeting of stockholders. The Plan will include establishment of a liquidating trust for the benefit of stockholders in the unlikely event that Merrimack might receive any future milestone payments from Ipsen or Elevation Technology.

Stockholders subject to taxation in the United States who receive a liquidating distribution generally will recognize a capital gain or loss equal to the amount received for their shares over their adjusted basis in such shares if shares are held in a taxable account. The tax consequences of the plan of dissolution may vary depending upon the particular circumstances of the stockholder. We recommend that each stockholder consult their tax advisor regarding the U.S. federal income tax consequences of the Plan of Dissolution as well as the state, local and non-U.S. tax consequences.

Based on the information currently available, Merrimack management estimates that the aggregate amount of the liquidating dividend payable to stockholders will be in the range of between approximately $14.65 and $15.35 per share. These estimates are based on, among other things, the receipt of the $225M milestone from Ipsen, Merrimack’s current and projected balance of cash, cash equivalents and marketable securities, estimated federal and state taxes payable for 2024, interest payable to the federal government pursuant to Internal Revenue Code Section 453A and state governments pursuant to similar state tax provisions due on the receipt of the Ipsen milestone payment, proceeds from the expected exercise of stock options, and amounts that will need to be retained by the Company to fund close down expenses and the liquidating trust. The estimated liquidating dividend represents Company management’s estimate of the amount to be distributed to stockholders during the liquidation but does not represent the minimum or maximum distribution amount. The total actual amount of distributions, if any, could be higher or lower, or, although highly unlikely, there may not be any liquidating distributions at all. It is possible that any initial distribution could be followed in the future by further distributions if it is determined that any reserved amounts no longer need to be held by the Company. The Company cannot predict with certainty the amount of liquidating distributions to be paid to Merrimack’s stockholders.

About Merrimack

Merrimack Pharmaceuticals, Inc. is a biopharmaceutical company based in Cambridge, Massachusetts that is entitled to receive up to $225 million in contingent milestone payments related to its sale of Onivyde to Ipsen S.A. in April 2017. This milestone payment is payable by Ipsen on or before March 29, 2024 as Ipsen has received FDA approval on February 13, 2024 for the use of Onivyde® plus 5 fluorouracil/leucovorin and oxaliplatin (NALIRIFOX regimen) as a treatment of first line metastatic pancreatic ductal adenocarcinoma (mPDAC).

Ipsen has not publicly communicated any current clinical trials which could lead to future milestone payments under the Ipsen Agreement. Elevation Oncology previously announced that it has paused activities under the program from which future milestone payments might be issued to Merrimack under the Elevation Agreement. As a result, Merrimack is not currently expecting to receive these additional potential milestone payments. Neither Ipsen nor Elevation Oncology share any non-public information regarding these programs with Merrimack.

SOURCE: Merrimack Pharmaceuticals