Merrimack IPO Falls Out Of The Gate

By Marie Daghlian

Merrimack Pharmaceuticals (MACK) raised $100 million in the only U.S. life sciences IPO in March. But its shares had fallen 13.7 percent at the close of trading on March 28. The Cambridge, Massachusetts-based biotech sold 14.3 million shares at $7 per share, valuing the biotech at $647 million. It was a long struggle for the targeted cancer drug developer. It postponed an IPO attempt in February through an offering of 16.7 million shares at a range of $8 to $10 a share, which if it had been successful would have raised as much as $150 million and valued the company at $853 million.

Merrimack has four targeted investigational cancer compounds in clinical development, two of which are in late stage development: MM-398, a nano-encapsulated formulation of the chemotherapy drug irinotecan being studied as a treatment for metastatic pancreatic cancer in patients who have failed treatment with gemcitabine; and MM-121, a fully human monoclonal antibody that targets the ErbB3 cell surface receptor, known to mediate communication inside and outside cells. MM-121 is being developed in collaboration with Sanofi-Aventis (SNY) which holds exclusive global rights. Merrimack is developing MM-398 with PharmEngine, which holds commercialization rights in Taiwan.

Merrimack joins six other life sciences companies that went public during the first quarter of 2012. All but one lowered their expectations to become public companies. Except for Merrimack, the life sciences IPO class of 2012 is trading an average of 20 percent above the initial offering price, a reflection of the Nasdaq Composite Index, which is up 18.7 percent since the beginning of the year.

Although aftermarket performance has improved, capital raised through U.S. IPOs is down 7.9 percent in the first quarter of 2012 compared to the same period last year, with seven companies raising $480 million in 2012 and eight companies raising $521 million in 2011. Outside the United States, there have been six IPOs so far this year, three in China and three in France, which raised a total of $404 million. This is a 50 percent drop in activity from the same period in 2011 when 12 companies raised $1.3 billion.

French biotech DBV Technologies made its public debut just before the end of the month through an IPO on the Euronext Paris exchange and a concurrent private placement. The company raised $53.6 million through the sale of 4.6 million shares at $11.80 a share, the low end of its target range, valuing the company at $157.1 million. DBV is developing allergy treatments that are delivered through the skin. Its investigational treatment for peanut allergies is in mid-stage testing in children and adults.