Merrimack Does Well to License Marginal Cancer Drug to Baxter

Baxter (BAX) has a hunger for cancer drugs with hair. 

Baxter is paying $100 million upfront to license ex-U.S.. marketing rights to the experimental cancer drug MM-398 from Merrimack Pharmaceuticals (MACK) , the companies announced Wednesday. Baxter's pairing with Merrimack follows similar partnerships already signed with Cell Therapeutics (CTIC) for the myelofibrosis drug pacritinib and Onconova Therapeutics  (ONTX)  for the blood cancer drug rigosertib. 

The common theme shared by all these deals: Each cancer drug licensed by Baxter has issues that raise concerns about their ability to gain regulatory approval or their commercial potential.

With MM-398, Baxter is getting a reformulation of the old chemotherapy agent irinotecan. Last May, Merrimack announced results from a Phase III study in pancreatic cancer patients in which the addition of MM-398 to 5-FU and leucovorin increased median overall survival by 1.9 months compared to 5-FU and leucovorin alone. (Median overall survival was 6.1 months versus 4.2 months favoring the MM-398 combination.)

As my colleague David Sobek pointed out, the pancreatic cancer survival benefit generated by MM-398 was marginal relative to competing therapies, including Celgene's (CELG) Abraxane.

For Merrimack, getting $100 million upfront for ex-U.S. rights to MM-398 is a job well done, particularly given the question marks about the drug's regulatory and commercial future. Merrimack is also eligible for additional milestone payments from Baxter and royalties on sales, if the drug is approved. 

In a similar vein, Baxter's decision to license pacritinib from Cell Therapeutics carries higher-than-normal risks because clinical data to date suggest it may only find a niche role treating myelofibrosis patients who stop responding to treatment with Incyte's (INCY) Jakafi.

Baxter's marketing rights to Onconova's rigosertib now appear worthless after the drug failed a Phase III study in myelodysplastic syndrome last February.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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