Merrimack Pharmaceuticals said today it will eliminate 22% of its workforce in a restructuring that included the resignation of the company’s president and CEO, Robert Mulroy.
Merrimack said the restructuring is aimed at refocusing its R&D on a set of systems biology-derived oncology products, as well as conserving cash over a longer period. The company said its cost-cutting efforts are expected to save more than $200 million over the next 2 years.
A statement issued by the company today on the restructuring did not detail how many jobs would be cut or which operations would see job reductions, except to say they would not affect Merrimack’s commercial team or its commercial launch and label expansion for Onivyde® (irinotecan liposome injection), which won FDA approval in October 2015.
Merrimack had a workforce of 426 full-time employees as of January 31, including more than 270 in R&D and manufacturing positions.
In connection with the job cuts, Merrimack projected it would incur approximately $4.5 million to $5.5 million in one-time charges for employee severance, benefits, and related costs. Merrimack Chairman Gary Crocker has been named interim president and CEO pending appointment of a permanent successor to Mulroy. The company said it will launch a search for that successor, to be led by John Dineen, who chairs the Merrimack board’s Organization and Compensation Committee and is a former CEO of GE Healthcare.
“This major restructuring will allow us to strategically align our pipeline with our core capabilities and prioritize ongoing clinical development efforts while improving our financial flexibility,” Crocker said in a statement. “We believe this sharper focus will drive efficiency and innovation and promote the interests of not only our shareholders and employees, but also of cancer patients worldwide.”
Following the restructuring, Merrimack said it now anticipates GAAP aggregate R&D and selling, general, and administrative expenses in 2017 of approximately $190 million—a cash “runway” expected to fund operations for at least the next 12 months based on cash on hand, anticipated near-term milestones and reimbursements, and profits from Onivyde.
Onivyde generated $22.9 million in net product revenue in the first two quarters of this year. In reporting second-quarter results on August 4, Merrimack reported a net loss of $50.8 million, up from a net loss of $38.5 million in Q1 2016 and net loss of $22.9 million in Q2 2015.
The company’s estimate corresponds to a non-GAAP financial measure of $165 million of aggregate R&D and selling, general, and administrative expenses in 2017 after excluding $25 million of anticipated milestone obligations to PharmaEngine, which are fully offset by corresponding milestone achievement obligations from Shire.