Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Merrimack Pharmaceuticals (NASDAQ:MACK), a biopharmaceutical company developing cancer-focused therapies to be paired with companion diagnostic tests, skyrocketed as much as 74% after announcing that MM-398, its late-stage pancreatic cancer therapy that is given to patients who've previously been treated with Gemzar, had met its primary endpoint of overall survival.
So what: According to Merrimack's press release, the combination of MM-398 with 5-flouroacil and leucovorin delivered an overall survival of 6.1 months, which was an improvement of 1.9 months compared to the placebo of 5-flouroacil and leucovorin alone which achieved only 4.2 months of overall survival. Furthermore, a hazard ratio of 0.67 implied a 33% death risk reduction for the MM-398 intent-to-treat arm as well as a "significant advantage" for progression-free survival. Merrimack intends to file a new drug application for MM-398 before the year is over.
Now what: There are so few success stories among experimental late-stage pancreatic cancer drug hopefuls that it's no wonder shares exploded to the upside today. A 1.9 month survival improvement may not seem like much, but its death risk reduction of 33% is significant, and we have to remember MM-398 would only be used as a second-line therapy for patients that have stopped responding to or had no response from Gemzar. While great news for shareholders, it's also difficult to say how successful MM-398 will ultimately be. Peak sales could hit somewhere around $800 million, but that will depend largely on how well Merrimack hands the launch (if approved). Following today's monstrous run, I'd still prefer to stick to the sidelines with Merrimack.
Merrimack shares may have soared today, but they'll likely be hard-pressed to keep up with this top stock over the long haul
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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