Image source: NIH Image Gallery via Flickr.

What: Shares of Merrimack Pharmaceuticals (MACK), a biopharmaceutical company focused on the development of therapies of treat cancer, surged by as much as 20% on Tuesday following a very favorable filing with the Securities and Exchange Commission from one of its directors.

So what: According to a filing with the SEC, independent director Vivian Lee, who's served on the board since 2014, purchased 35,000 shares on the open market yesterday, Feb. 29, at a price of $5.50 per share. Even though the total purchase price amounts to just $192,500, it marked the first open-market insider purchase of Merrimack's common stock since Aug. 2015. Management and the board of directors for a company understand their business far better than any Wall Street analyst, so when insiders go buying, investors tend to pay attention.

Lee's purchase comes just days after Merrimack's stock sank to a nearly two-year low, and a little over four months following the Food and Drug Administration approval of its first product, Onivyde, which is used in combination with fluorouracil and leucovorin to treat metastatic pancreatic cancer patients who've been previously treated with Gemzar.

Now what: While this insider buy is a good sign for shareholders, especially considering that most insider selling from the company appears to have been pre-determined, potentially for tax purposes, the important point to remember is that it's just a temporary share-price mover. What investors will want to closely monitor is Merrimack's pipeline, because that's where real value is going to be created or lost.

As it stands now, despite having seven unique therapies in clinical trials, all eyes are on Onivyde. As a later-line combo therapy in pancreatic cancer, Onivyde will help stem Merrimack's annual losses and cash burn. However, where the game could really pick up is if Onivyde performs well as a treatment for front-line metastatic pancreatic cancer. Onivyde is being studied in breast cancer as well. If everything goes according to plan for Merrimack, Onivyde could deliver more than $1 billion in peak annual sales, which would certainly make Merrimack look inexpensive based on its current price.