Merrimack Pharmaceuticals, Inc.

Geoff Grande - Investor Relations Bob Mulroy - President and Chief Executive Officer Bill Sullivan - Chief Financial Officer

Thanks, Shannon. Good afternoon everyone and thank you for joining us.

Today, we'll review our first quarter 2015 financials and provide an update on our clinical progress. A press release detailing this information issued a short while ago can be found in the investors’ section of our website at merrimackpharma.com.

This call is being broadcast live and will be archived on our website for six weeks. I'm joined today by Bob Mulroy, our President and CEO; and Bill Sullivan, our CFO.

We’ll end the formal portion of the call with time for Q&A. Before we begin, I need to remind you that during this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These may include statements about our future expectations and plans, clinical development timelines, the potential success of our product, and financial projections. These statements involve risks and uncertainties which are described in the risk factors section of the most recent Form 10-K and the other reports we file with the SEC, which are available online at sec.gov.

While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on any obligation to do so.

With that, I'll turn the call over to Bob.

Thank you, Geoff. It’s a pleasure to speak with you all today and update you on our progress over the past couple of months.

For those of you who are new to the company, Merrimack is a fully integrated cancer company built on the scientific foundations and systems engineering to better understand the dynamics that drive a multifaceted disease. Our goal is to translate those insights into best-in-class precision medicines and integrate targeted therapeutics and diagnostics into solutions that meet the challenges of treating cancer.

We are currently advancing a robust clinical pipeline of therapeutics paired with companion diagnostics derived from our systems insight that seek to address three big problem areas in cancer: optimizing the tumor specific deposition and duration of exposure of anticancer agents; identifying and reversing the problem of drug resistance; and developing agents and regimens that address complex multi-pathway driven tumors. Though it has just been eight weeks since our last call, our progress has been significant.

The highlights include; first, the completion of the rolling submission of our NDA filing for MM-398 for the treatment of metastatic pancreatic cancer patients in the Post-Gemcitabine setting. Second, the announcement of the submission by our partner, Baxter Biosciences of a Marketing Authorization Application to the European Medicines Agency for regulatory approval of MM-398 in Europe.

Third, we announced the initiation of a Phase 2 clinical trial of MM-141 plus or minus the combination of nab-paclitaxel and gemcitabine in IGF-1 positive metastatic pancreatic cancer patients in the frontline setting. And fourth, we presented new clinical data for MM-302 and MM-141 in two separate oral presentations at AACR, providing additional evidence of their activity in late-stage biomarker positive cancer patients.

Let me touch now briefly on each of the advances individually. First, our NDA filing for MM-398, which we completed on April 24.

This is a huge effort that is a significant step forward for the company, and I want to congratulate and thank everyone at Merrimack that helped make this possible. We are all proud of the team that led the way.

As you know, the process began late last year when we were granted fast track designation by the FDA, allowing us to begin a rolling submission. We have fully completed the submission process and now wait the FDA’s decision on the acceptance of our submission, which should come within the next 74 days.

We have also requested priority review from the FDA and anticipate hearing a decision on that request in this similar timeframe. In other news, we also announced earlier this week that Baxter had submitted the marketing authorization application to the European Medicines Agency.

This is important as it serves as the initiation of our efforts to reach global markets with MM-398. I want to express Merrimack’s thanks and congrats to the entire Baxter team who completed the EU filing.

The co-ordinated filings by Merrimack and Baxter, our testament to the strength of our partnership and our joint commitment to the potential for 398 to benefit patients worldwide. We look forward to working with Baxter as they pursue additional applications in other international markets.

The third recent news item is our announcement of the initiation of a Phase II trial of MM-141 in front-line metastatic pancreatic cancer, which occurred earlier this week. The trial is a randomized double blind placebo controlled trial of MM-141 in combination with nab-paclitaxel and gemcitabine, versus nab-paclitaxel and gemcitabine alone.

MM-141 is our novel bispecific tetravalent antibody that binds to both IGF-1R and ErbB3. Our systems approach identified a feedback loop between the IGF and ErbB pathways that prevented IGF driven tumors from benefiting more completely from previous IGF-only targeted therapies.

We have also presented data showing that MM-141 can specifically sensitize tumor cells to the nab-paclitaxel and gemcitabine combination. Our belief in the potential 141 to benefit IGF-positive patients was supported recently by new clinical data from or Phase I dose ranging study that was presented at the AACR annual meeting in April.

The trial found that patients that were biomarker positive identified as high serum levels of IGF-1 stayed on therapy approximately 80% longer than patients who were biomarker negative. This emphasis on biomarker positive patients will continue in the Phase II study in first line pancreatic cancer as we plan to enroll only those patients who are biomarker positive.

This biomarker-driven approach is another example of our systems biology-based integration with therapeutic and diagnostic solutions to fight cancer. The 141 trial is designed to treat a 146 biomarker positive patients that will be randomized one-to-one between the arms.

The primary endpoint of the trial is progression free survival and we will be looking for a hazard ratio below 0.63. Our second oral presentation at AACR this year featured an update on the clinical data of MM-302, a novel HER2-targeted liposomal doxorubicin.

This presentation was the final clinical readout of our Phase I study, which enrolled heavily pre-treated metastatic breast cancer patients, specifically the overall study populations have received a median of four prior therapies. Trial results show that the overall population had a median progression free survival of 7.6 months, which is more than twice what was demonstrated in a separate study of the currently available third line regimens.

The THERESA trial showed that patients in this later line setting experienced progression after a median of 3.3 months, which exemplifies significant unmet need for new therapeutic options for patients in the late line metastatic breast cancer setting. Of particular note from our clinical data, a subset of 25 patients in our Phase I trial who have not been previously treated with anthracyclins had a median progression free survival of 11 months.

Based on this data, we have initiated a Phase II study of MM-302 called the HERMIONE study that is underway testing 302 plus Herceptin versus a dealer’s choice plus Herceptin in anthracycline-naïve patients in the third line metastatic breast cancer setting. A trial has been designed with input received from the FDA to support a potential accelerated approval.

Enrollment continues to make steady progress and we look forward to keeping you updated as the trial progresses. Taking a look now at the months ahead, there are number of important clinical milestones on the horizon.

The development of MM-398 in other indications continues. We have an ongoing investigator sponsored Phase 1 trial in glioma and another investigator sponsored Phase 1 trial in pediatric sarcomas that is nearing the completion of enrollment.

In addition, we are working with our partner Baxter to initiate two additional registration paths for MM-398, a trial in the frontline pancreatic cancer and a trial in first-line HER2-negative gastric cancer. We anticipate initiating both of these trials in 2015.

Our work on deposition imaging diagnostic for 398 continues across multiple types of solid tumors. On the commercial front, we are on track with our preparations for our commercial launch of 398 in the U.S.

We have a strong and experienced team in place across all major commercial functions, including medical affairs, marketing, access, field force management, and commercial manufacturing. We anticipate completing the build out of our field team later this year.

As we outlined at our Analyst Day in December, given the high concentration of patients in relatively few pancreatic treatment centers, we anticipate effectively serving the U.S. market with a field team of fewer than 50 individuals.

In other clinical milestones, we continue to make enrollment progress in our Phase 2 study of MM-121 in heregulin positive patients with non-small cell lung cancer which we initiated in February of this year. We also continue to work on the development of a Phase 2 trial for MM-151, our oligoclonal EGFR inhibitor that we expect to discuss and launch later this year.

Finally, let me touch on our business development efforts. It remains our objective to fund the development of MM-121 beyond lung cancer into two registration-seeking trials in breast cancer with capital secured through business development.

Our discussions are ongoing and we continue to be pleased with the strong interest and progress we were making on that front. As previously stated, it is our intent to secure a deal to start the breast cancer program with 121 in 2015.

In summary, it’s been a very productive eight weeks and we look forward to updating you on our progress on all of these programs in the months ahead. Now, let me turn the call over to Bill Sullivan to discuss our financial results.

Bill?

Thanks, Bob, and good afternoon to everyone. Our first quarter 2015 financials are included in our press release, which was distributed a short while ago.

Net loss for the first quarter of 2015 was $34.4 million and consisted of $14.8 million in collaboration revenues, $44.9 million in operating expenses, and a $4.4 million loss from other expenses. The $14.8 million in collaboration revenues consisted entirely of revenue recognized under our proportional performance model associated with our Baxter collaboration.

Approximately $35.7 million or 80% of operating expenses consisted of research and development expenses. Of this, $23.4 million or 66% related to clinical stage programs, and $10.3 million or 29% related to pre-clinical, general research, and discovery costs.

The other $9.2 million or 20% of operating expenses consisted of general and administrative expenses. The $4.4 million loss from other expenses was primarily related to interest expense on our term loan with Hercules and Merrimack’s convertible senior notes.

Approximately $1.9 million of interest expense was imputed non-cash expense related to the conversion feature of our senior notes. Looking at our balance sheet, cash and cash equivalents and available for sale securities decreased $32.3 million during the first quarter of 2015.

Turning to our financial guidance. Merrimack expects to be able to fund operations into 2016 to unrestricted cash and cash equivalents and available for sale securities of $91.8 million as of March 31, 2015, anticipated cost sharing reimbursements from Baxter, and the anticipated receipt of $66.5 million of net MM-398 milestone in 2015.

Any payments received from additional business development would further extend our cash runway. At this point, I will turn the call back over to Geoff.

Thanks, Bill. And before we wrap up, I’d like to mention that we will be attending a few upcoming conferences including the Jefferies 2015 Global Healthcare Conference on June 2 in New York; the Cantor Fitzgerald Healthcare Conference on July 8 in New York; and the BMO Capital Markets Biotech Corporate Access Day on July 28 in Boston.

We hope to see you at one of these events. And with that, operator, we would like to open the line for any questions.

Hi, guys. This is Jeff on for Eric.

Thanks for taking my questions and congrats on all the progress. First question is on the initiation of front-line metastatic pancreatic cancer for MM-398, what are some of the hurdles to further initiation or when might we see the initiation take place?

Hi, Jeff and thanks for your question. I think that we are working through the pretty classic process to get the trial together.

Having developed a protocol with our partner, you need to go out in the world and get investigator buying a support. You need to work through all our logistics.

We are expecting getting a trial started and we are in the middle of that process, and we are hopeful that in the pretty near future we will be able to provide the details on the study and talk about timing.

Okay, thanks. And you mentioned that Baxter is pursuing other indications for MM-398 in other markets.

Have you disclosed or Baxter has disclosed what other indication that those might be?

So, not other indications. Their intent is to file the existing post gem pancreatic cancer indication in other territories.

So, under our agreement with Baxter, we will be commercializing in the U.S. and they will be commercializing in the rest of the world.

What we announced earlier this week is that, Baxter has submitted the application for approval in the European Union. Obviously, there’s a large number of territories left and they will be pursuing those in the time coming ahead.

Okay. And just last one from me.

For MM-141, I believe the data disclosed at ACR has some GI tolerability issues. Can you just describe how manageable that is and just something that keep an eye on moving forward?

Thanks.

So, I am not aware of any GI tolerability issues, but from the dataset that stood out from the investigators point of view, but happy to get to you in touch after the call with the folks who’ve conducted the study, and we could follow-up specifically on anything that you might have seen that you wanted to follow-up on.

Okay. Thanks.

Great. Thank you everyone for joining us today.

We look forward to updating you again next quarter.