With New Drugs Slow on the Take, and No CEO, Merrimack will Cut 22 Percent of Staff
Shares of cancer biotech Merrimack fell more than 8.7 percent, Monday, which is only the latest slip for the company. Indeed, times have not been easy for the Cambridge, MA-based, with shares down 31 percent over the last year.
As such, the company announced plans to cut 22 percent of its 426-strong staff—as of Monday—while the current board chairman Gary Crocker attempts to find a replacement for chief Robert Mulroy, who is leaving the company.
Obviously, this is a major restructuring effort to save liquidity and, fortunately, most of the cuts they needed to do are already done. The company explains, too, that the cuts should not have an impact on the commercial team or the commercial launch and label expansion of its newer product, Onivyde. The drug was only approved last year, after a setbacks during its proprietary testing. However, the company also received a speedy FDA review for its lung cancer drug candidate seribantumab, in July, so it does have a little momentum
According to Crocker: “The board is committed to focusing our resources. 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.”
He goes on to say, “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. The realization of shareholder value will become as intense a focus for Merrimack as our strength in innovation and development. The board is convinced that there is tremendous inherent value within Merrimack that can be unlocked.”
To assist him, Croker has brought in former GE Healthcare CEO and present chairman of the Organization and Compensation Committee, John Dineen.
In addition, CFO and head of corporate development, Dr. Yasir Al-Wakeel notes, “This strategic shift is designed to align our resources with the programs that have the greatest potential for disruptive change in the diagnosis and treatment of cancer, as well as to significantly increase our financial flexibility.”
He explains further that this cut could save the company upwards of $200 million by improving research and development efficiency and through better cost containment and prioritization over the next couple of years.