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Merrimack Reports Fourth Quarter And Full Year 2012 Financial Results

About Merrimack

Merrimack Pharmaceuticals is a biopharmaceutical company discovering, developing and preparing to commercialize innovative medicines paired with companion diagnostics for the treatment of serious diseases, with an initial focus on cancer. Merrimack applies Network Biology, its proprietary systems biology-based approach to biomedical research, throughout the research and development process. Merrimack currently has six targeted therapeutic oncology candidates in clinical development. 

Cautionary Note on Forward-Looking Statements

To the extent that statements contained in this press release are not descriptions of historical facts, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include any statements about Merrimack's strategy, future operations, future financial position and future expectations and plans and prospects for Merrimack, and any other statements containing the words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," and similar expressions. In this press release, Merrimack's forward-looking statements include statements about Merrimack's anticipated milestones over the next 12 months, Merrimack's presentations at upcoming investor and scientific conferences and expectations regarding the sufficiency of Merrimack's cash balance to fund operating expenses and capital expenditures. Such forward-looking statements involve substantial risks and uncertainties that could cause Merrimack's clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the initiation of future clinical trials, availability of data from ongoing clinical trials, expectations for regulatory approvals, development progress of Merrimack's companion diagnostics, availability of funding sufficient for Merrimack's foreseeable and unforeseeable operating expenses and capital expenditure requirements, and other matters that could affect the availability or commercial potential of Merrimack's drug candidates or companion diagnostics. Merrimack undertakes no obligation to update or revise any forward-looking statements. Forward-looking statements should not be relied upon as representing Merrimack's views as of any date subsequent to the date hereof. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Merrimack's business in general, see the "Risk Factors" section of Merrimack's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on November 14, 2012 and other reports Merrimack files with the SEC.
Merrimack Pharmaceuticals, Inc.         
Unaudited Condensed Consolidated Statements of Comprehensive Loss        
(in thousands, except per share amounts)        
         
  Three Months Ended December 31,  Year Ended December 31, 
  2011 2012 2011 2012
Collaboration revenues $12,577 $14,191 $34,215 $48,921
Operating expenses:        
Research and development 27,529 34,564 100,630 125,858
General and administrative 3,215 4,155 14,454 15,805
Total operating expenses 30,744 38,719 115,084 141,663
         
Loss from operations (18,167) (24,528) (80,869) (92,742)
         
Other income and expenses, net (54) (365) 1,193 988
         
Net loss $(18,221) $(24,893) $(79,676) $(91,754)
         
Less net loss attributable to non-controlling interest (105) (125) (453) (477)
         
Net loss attributable to Merrimack  $(18,116) $(24,768) $(79,223) $(91,277)
         
Other comprehensive loss, net -- (48) -- (38)
         
Comprehensive loss $(18,116) $(24,816) $(79,223) $(91,315)
         
Net loss per share available to stockholders - basic and diluted $(1.76) $(0.26) $(7.67) $(1.28)
         
Weighted-average common shares used in computing net loss per share available to common stockholders - basic and diluted (1) 11,495 94,703 11,343 72,831
         
(1 ) In April 2012, Merrimack closed the initial public offering of its common stock pursuant to a registration statement on Form S-1, as amended. Merrimack sold an aggregate of 15,042,459 shares of common stock under the registration statement at a public offering price of $7.00 per share, including 742,459 shares pursuant to the exercise by the underwriters of an over-allotment option. Net proceeds were approximately $98.1 million, after deducting underwriting discounts and commissions and other offering expenses payable by Merrimack but prior to the payment of accrued dividends on Merrimack's Series B convertible preferred stock. Upon closing the initial public offering, all outstanding shares of Merrimack's convertible preferred stock were converted into 66,255,529 shares of common stock, all outstanding warrants to purchase shares of convertible preferred stock were converted into warrants to purchase shares of common stock and approximately $4.3 million of cash dividends became payable to the holders of Series B convertible preferred stock.
   
Merrimack Pharmaceuticals, Inc.  
Unaudited Condensed Consolidated Balance Sheets  
(in thousands)    
Assets As of December 31, 2011 As of December 31, 2012 (1)
Cash and cash equivalents $50,454 $37,714
Available-for-sale securities -- 72,238
Restricted cash -- 100
Accounts receivable 7,426 9,267
Deferred financing costs 1,946 32
Prepaid expenses and other current assets 5,763 8,950
Total current assets 65,589 128,301
     
Restricted cash 381 528
Property and equipment, net 6,206 6,297
Other assets 23 1,068
Intangible assets, net 2,485 2,165
In-process research and development 7,010 7,010
Goodwill 3,605 3,605
Total assets $85,299 $148,974
     
Liabilities, Convertible Preferred Stock, Non-controlling Interest and Stockholders' Deficit    
Accounts payable, accrued expenses and other $17,511 $24,936
Capital lease obligations 48 --
Deferred revenues 7,712 9,350
Deferred rent 125 1,153
Deferred tax incentives 755 512
Derivative liability -- 196
Loans payable -- 2,373
Total current liabilities 26,151 38,520
     
Deferred revenues 78,033 71,114
Deferred rent 23 6,323
Deferred tax incentives 1,267 755
Convertible preferred stock warrants 1,516 --
Loans payable -- 37,482
Accrued interest -- 1,200
Total liabilities 106,990 155,394
     
Convertible preferred stock 268,225 --
Non-controlling interest 574 97
Total stockholders' deficit (290,490) (6,517)
Total liabilities, convertible preferred stock, non-controlling interest and stockholders' deficit $85,299 $148,974
     
(1 ) In April 2012, Merrimack closed the initial public offering of its common stock pursuant to a registration statement on Form S-1, as amended. Merrimack sold an aggregate of 15,042,459 shares of common stock under the registration statement at a public offering price of $7.00 per share, including 742,459 shares pursuant to the exercise by the underwriters of an over-allotment option. Net proceeds were approximately $98.1 million, after deducting underwriting discounts and commissions and other offering expenses payable by Merrimack but prior to the payment of accrued dividends on Merrimack's Series B convertible preferred stock. Upon closing the initial public offering, all outstanding shares of Merrimack's convertible preferred stock were converted into 66,255,529 shares of common stock, all outstanding warrants to purchase shares of convertible preferred stock were converted into warrants to purchase shares of common stock and approximately $4.3 million of cash dividends became payable to the holders of Series B convertible preferred stock.    
CONTACT: Investor & Media Contact:
         Kathleen Petrozzelli Gallagher
         Corporate Communications
         Merrimack
         617-441-1043
         kgallagher@merrimackpharma.com

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