Merrimack Pharmaceuticals Inc (NASDAQ:MACK) has resolved to dispose of its cancer drugs unit to Ipsen. Some of these drugs include Doxil and Onivyde. The deal is worth close to $1.025 billion with Onivyde alone expected to fetch approximately $800 million.
U.S. and Taiwan
While the US marketing rights of Onivyde are owned by Merrimack, in Taiwan the same are owned by PharmaEngine. Outside of the United States and Taiwan, the responsibility for developing and commercializing Onivyde lies with Shire PLC (NASDAQ:SHPG). In the deal, France-based Ipsen will get the rights to commercialize Onivyde in the United States as well as the rights to Doxil.
The exclusive licensing agreement that Merrimack has with Shire outside of the United States will remain, however. Merrimack will still continue to get net milestone payments with regards to the development and commercialization rights to the tune of $33 million.
Following the deal, Merrimack will cut down on its employee numbers drastically. Over 80 percent of its employee base will be let go and the firm will remain with about 80 workers when the deal is completed in Q1 of 2017.
Special cash dividend
When broken down, the $1.025 billion that Merrimack will receive will comprise cash proceeds totaling $575 million that will emanate from cancer drug revenues. Merrimack will also get milestone payments totaling about $450 million. Shareholders will benefit from the cash proceeds as about $200 million will be paid out in a special cash dividend.
Gary Crocker, chairman and CEO of Merrimack, praised the decision saying it would be of maximum benefit to shareholders. Merrimack’s CEO also added that the firm wanted to concentrate on pipeline products MM-310, MM-141, and MM-121 as they were the programs that offered the most attractive returns on investment in the future.
In the recent past, Merrimack has been cash-strapped and the deal will offer a chance for the pharmaceutical firm to restructure and chart a new path. Just over two months ago, then-CEO Robert Mulroy quit, and the move was followed by the laying off of 22 percent of the workforce.
In Monday’s trading shares of Merrimack Pharmaceuticals Inc rose by 1.94% to close the day at $3.64.