Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Merrimack Pharmaceuticals Inc (MACK) Sees Earnings Boost As FDA Accepts Application For Generic Drug

Merrimack Pharmaceuticals Inc (NASDAQ:MACK) and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) have moved closer to introducing their generic version of Johnson & Johnson (NYSE:JNJ) drug DOXIL to the market. The FDA has accepted an application from the companies to review the generic drug for commercialization approval.

DOXIL is a doxorubicin hydrochloride (HCI) liposome administered through injection. The drug is sold in the U.S. by Johnson & Johnson’s subsidiary Janssen Products. It is offered as a treatment for ovarian cancer and multiple myeloma. Prior to 2011, DOXIL logged about $600 million in annual worldwide sales. But Johnson & Johnson suffered problems with production of the drug, leading to a supply shortage that has now created an opportunity for Merrimack and others to develop and seek approval for a generic version of the chemotherapy treatment.

pharmacist, senior, man, talking, helpful, nhs, helping, counter, medication, older, american, drugs, woman, shelves, male, pack, usa, medical, practice, horizontal, adult,

Monkey Business Images/

Sharing Revenue

Merrimack Pharmaceuticals Inc (NASDAQ:MACK) said generic DOXIL is the first product it is working on in partnership with Actavis. Under the partnership, Merrimack is charged with the responsibility of developing the drug and later producing it in large quantity for Actavis to sell. In addition to be responsible for selling the drug, Actavis is also responsible for regulatory approvals.

If Merrimack’s generic DOXIL is successful, the company will share revenue with Actavis. Merrimack is expected to receive royalty payments in the rate of mid-twenties of the net profits coming from the sales of generic DOXIL.

The company said the anticipated contribution from the DOXIL-linked income would not only help it cover costs of developing the drug, but also meaningfully boost its earnings.

But Merrimack’s HCI will battle for market share not only with Johnson & Johnson’s DOXIL, but also with Sun Pharma Global’s generic version of the same drug. The FDA approved generic DOXIL from Sun Pharma to offset a supply shortage of the drug after Johnson & Johnson suffered manufacturing disruption.

Restructuring Mode

The update on generic DOXIL comes at a time when Merrimack is undergoing restructuring. The company announced plans to cut 22% of its workforce as part of the efforts to eliminate $200 million in expenses. The restructuring process led to the resignation of the company’s CEO Robert Mulroy. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is in the process of recruiting a permanent CEO.

Follow Merrimack Pharmaceuticals Inc (NASDAQ:MACK)
Trade (NASDAQ:MACK) Now!

Note: This article is written by Andy Parker and originally published at Market Exclusive.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.