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 (MACK +0.00%), 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.
