It’s not often that you’ll find a company with six cancer drugs in clinical trials that have their own companion diagnostics, and an in-house drug discovery engine. So why all the skepticism surrounding Merrimack Pharmaceuticals?
After going public in March 2012 at $7 a share, Cambridge, MA-based Merrimack (NASDAQ: MACK) still has a lot to prove to investors. Shares trade at roughly $5 apiece, have never gone far north of $11, and have slumped during a year in which the Nasdaq Biotech Index as a whole has jumped 28 percent.
Merrimack hopes to deliver the kind of results its long-term backers have been counting on. By the fall, Merrimack will wrap up four separate mid-stage clinical trials on a cancer drug known as MM-121, which it licensed to Sanofi in 2009 and is now being tested in patients with breast cancer, ovarian cancer, and lung cancer. It will also unveil the results of a 405-patient late-stage study on MM-398, a nanotherapeutic Merrimack is testing in patients with pancreatic cancer whose condition has worsened after prior therapies. If one or more of those trials succeed, then Merrimack will have some evidence to suggest it’s on the right track with its drug discovery approach that leans heavily on computer models; companion diagnostics; and small patient populations with well-defined molecular abnormalities.
Should Merrimack back up that plan with some eye-opening data, investors might look Merrimack in a different light.
“The good news is, there are a bunch of cards getting turned over this fall,” says Merrimack president and CEO Robert Mulroy. “But [that’s] really just the beginning of the wave of opportunities for us that can create the kind of returns investors are hoping for, and that we’re hoping for.”
Merrimack was founded by scientists at Harvard University and the Massachusetts Institute of Technology in 2000 around a technology called a high-density protein array, a way to measure the interactions between proteins over time. Think of it as a movie that captures how proteins interact with one another. Merrimack takes the data from that movie and makes an interactive computer model from it that researchers can play with to figure out things such as what target to attack, or what type of drug they should add (an antibody or small molecule, for instance). Researchers can then design that drug and test a simulated version of it in the computer model to predict how it would behave in a cell. Merrimack then goes and builds it into a real therapeutic. The idea is that the system is a more efficient, accurate—and more importantly, far less costly—way to find a productive drug.
“We design that drug, simulate it, and then go build that drug, as opposed to screening millions of compounds against a potential target and then reverse-engineering why it might be working, which is sort of today’s model,” Mulroy says.
Merrimack’s plans are ambitious: it views itself as an emerging drugmaking factory whose technology can be used to churn out products in any therapeutic category, though it has chosen to keep its focus on cancer. Merrimack recently spun out Silver Creek Pharmaceuticals, for example, solely so its platform could be used to create cardiovascular drugs. And Mulroy says if other in-house ideas in neurology, infectious disease, bone and joint disease reach the proof of concept stage as well, Merrimack will spin those out too.
Merrimack currently has six cancer drug candidates in clinical trials, and a pipeline of other molecules coming behind all of that, Mulroy says. The breadth of opportunity is what drove Merrimack’s decision to go public in March 2012. It had four drugs in the clinic at the time and more coming, and needed more cash to keep all of its programs going. By the time it filed its initial IPO prospectus, Merrimack said it had already burned through more than $285 million of investor money over 11 years. The company’s venture backers surely were ready to start realizing some returns on that investment.
But all of that investment, in time and money, won’t mean a thing to public investors unless Merrimack shows hard clinical evidence that its approach produces drugs that really work.
Merrimack will get a big chance to prove itself shortly when it finishes several mid-stage tests of MM-121, a cancer antibody targeting HER-3, or ErbB-3, a receptor on the surface of cancer cells.
Merrimack is going after the HER-3 because its computer models showed that the protein binded to other receptors in the same family such as HER-1 or HER-2 (targets of other successful cancer drugs like trustuzumab (Herceptin) and then amplifies their signal. So in theory, targeting HER-3 should be a more effective way to fight tumors. Merrimack created MM-121 based on its computer models, and became quickly encouraged when it put the drug into early-stage trials. In MM-121’s first clinical study, 28 total patients with ovarian or breast cancer got the drug and a chemo agent called paclitaxel. Merrimack targeted patients who had been through several lines of care already, and came back with data showing that 48 percent of patients had a greater than 30 percent reduction in their tumors, according to Mulroy.
Merrimack is now shooting higher, running a series of mid-stage studies with three goals in mind: proving that MM-121 works, that its companion diagnostics can accurately predict who should take it—and who shouldn’t—and using those results to run a more efficient, cheaper late-stage clinical trial.
The studies contain roughly 1,000 combined patients testing MM-121 both as a first- and second-line treatment in ovarian, breast, and lung cancer. Merrimack doesn’t’ expect all of these studies to hit. Rather, it’s using the studies to find out exactly when MM-121 does its best work—before other treatments, after them, or in combination with chemotherapies or other targeted cancer drugs.
Ideally, Merrimack’s diagnostics would successfully pick the patients who subsequently see their tumors shrink and live longer, giving the company the credibility with the FDA to construct a refined, smaller late-stage trial that only includes patients who test positive with its diagnostics. This, in turn, would allow Merrimack to avoid spending the mega-dollars pharmaceutical companies pour into gigantic cancer trials just so they can hopefully enroll enough total patients to find enough who will actually respond to therapy. By keeping the clinical trials small and targeted, Merrimack hopes to save a lot of time and money.
“That’s what we’re trying to get to,” Mulroy says. “We’re trying to drive a stake through the heart of the multi-thousand patient cancer trial. It just needs to be done.”