Replies to post #3293 on GTC Biotherapeutics (fka GTCB)

[ThomasS]

Merrimack: I doubt if even they are getting any. Who has even heard of Merrimack outside of our group of goat enthusiasts?

[DewDiligence]

GTC’s Supply Relationship with Merrimack Pharma

[Updated for the new phase-2 MM-093 trial in RA to test a higher dose.]


Merrimack is a private company based in Cambridge, Massachusetts whose lead drug, MM-0903, is human alpha-fetoprotein produced by GTC using transgenic goats. Merrimack and GTC have been working together since 1999 (when Merrimack was doing business as Atlantic BioPharmaceuticals); the most recent update to the relationship came in September 2005 (#msg-7807962).


MM-093 is being tested in three indications: rheumatoid arthritis (RA), psoriasis, and uveitis (an ophthalmic “orphan” indication). In RA and psoriasis, Merrimack has completed a phase-2 trial; in uveitis, a phase-2 trial just began. These are the relevant PR’s on each program:

#msg-18857239 (new ph-2 in RA to test higher dose)
#msg-8163705 (original phase-2 trial in RA)
#msg-10727170 (psoriasis)
#msg-18468726 (uveitis)

Merrimack will report data from the first phase-2 trial in RA at the European Congress of Rheumatology (EULAR) in Barcelona, Spain, June 13-16, 2007.

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Although Merrimack is a private company and does not reveal many details about its clinical programs, we know that GTC has budgeted cash receipts from Merrimack during 2007 (see the bottom of #msg-17607391) and has expanded the size of the goat herd for MM-093 (#msg-14522024). This and the fact that the uveitis program just commenced are signs that, overall, Merrimack is making progress with MM-093.

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What are the economics of the Merrimack relationship with GTC?

The main economic upside for MM-093 is in RA, a very large indication. If MM-093 works in RA, its non-TNF-a mechanism of action and presumably low incidence of side effects ought to put it in a strong position to serve the roughly 50% of RA patients for whom one of the TNF-a drugs (Remicade, Humira, Enbrel) does not do the trick. Moreover, MM-093 should be safer than Rituxan, which is emerging as a popular choice in second-line RA following failure on a TNF-a drug.

Although it’s still early in the development program, it’s not unreasonable to think that MM-093 has bona fide blockbuster potential in RA. If this turns out to be true, even relatively thin supplier margins could eventually mean big money for GTC.

My guess is that GTC will get a mid-single-digit IP royalty on MM-093 sales and a markup on GTC’s fully-allocated production cost for bulk product that GTC sells to Merrimack. For the production cost mark-up, the industry standard is about 10%. If, for the sake of discussion, we say that GTC’s fully-allocated production cost will be 15% of the end-user selling price of MM-093, then the 10% mark-up is equivalent to a 1.5% royalty on sales over and above the royalty that will be earned for Merrimack’s use of GTC’s IP. Hence, the overall economic value of the deal for GTC could be a high-single-digit royalty on sales. This could amount to a highly consequential income stream if MM-093 achieves blockbuster status.

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What is the IP for MM-093?

http://www.merrimackpharma.com/newsEvents/2002/26Feb02CompMatterPatent.pdf

[DewDiligence]

Merrimack Pharmaceuticals Completes Enrollment in Phase-2 Study of MM-093 in Rheumatoid Arthritis

[This is the phase-2 study using as higher dose (60mg) than what was tested in the prior RA study. The PR promises results later this year but is not specific about the venue for reporting them.]

http://biz.yahoo.com/prnews/080314/nef031.html?.v=46

>>
Friday March 14, 12:00 pm ET

CAMBRIDGE, Mass., March 14 /PRNewswire/ -- Merrimack Pharmaceuticals, Inc. today announced that enrollment has been completed in a Phase 2 trial of 100 patients that evaluates the safety and efficacy of its lead product, MM-093, in patients suffering from rheumatoid arthritis (RA). MM-093 is a recombinant version of human alpha-fetoprotein (AFP).

The randomized, double-blind, placebo-controlled, Phase 2 study is being conducted at 20 centers throughout the United States. The objective of this study is to examine the safety and efficacy of MM-093 in patients with moderate to severe, active RA despite treatment with stable doses of methotrexate. Each patient receives 60mg of MM-093 per week or placebo for 12 weeks and will then be followed for a period of 4 weeks. In addition to evaluating the safety of MM-093, patients will be assessed for changes in the signs and symptoms of their disease using standard clinical outcome measurements for RA, such as ACR20 and DAS28 scores. Patients who complete the study are eligible to participate in an ongoing Open-Label Extension study, which has enrolled over 35 patients to date.

"We are pleased to have completed enrollment and are thankful for the enthusiasm of the investigators who have worked diligently to enroll patients," said Dr. William Slichenmyer, Senior Vice President and Chief Medical Officer at Merrimack. "We believe MM-093 represents a promising and novel approach to the treatment of a broad range of autoimmune diseases. We look forward to completing the study and communicating the results later this year."

In addition to the ongoing studies in RA, MM-093 is currently being tested in a pilot study for patients with certain types of autoimmune uveitis, an inflammatory disorder of the eye.

Merrimack controls a strong intellectual property estate around MM-093 including 15 issued patents and a number of pending applications, both in the U.S. and internationally, which cover composition of matter, production methods and therapeutic uses of the drug.

Merrimack Pharmaceuticals, Inc., is a biotechnology company focused on the discovery and development of novel treatments for diseases in the areas of autoimmunity and cancer. Its lead compound, MM-093, is currently in clinical development to treat patients with rheumatoid arthritis or with autoimmune uveitis. MM-093 is an investigational drug and has not been approved by the U.S. Food and Drug Administration or any international regulatory agency. The company's proprietary Network Biology discovery platform, developed with the help of leading scientists from MIT and Harvard, enables the high throughput profiling of protein networks as a basis for improved validation, lead identification and speed in the development of innovative, effective and safe therapeutics. Merrimack is a privately-held company based in Cambridge, Massachusetts. For additional information, please visit http://www.merrimackpharma.com.
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