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Baxter and Merrimack Enter into Exclusive Ex-U.S. Licensing Agreement

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Baxter International Inc. and Merrimack Pharmaceuticals, Inc. have jointly announced an exclusive license and collaboration agreement for the development and commercialization of MM-398 (nanoliposomal irinotecan injection), also known as "nal-IRI."

Through the agreement, Baxter gains exclusive commercialization rights for all potential indications of MM-398 outside the United States and Taiwan, and Merrimack retains commercialization rights in the United States; the rights in Taiwan are held separately.

MM-398 is an investigational drug candidate for which Merrimack is preparing a New Drug Application in the United States for the treatment of patients with metastatic pancreatic cancer previously treated with a gemcitabine-based therapy. Pancreatic cancer is a rare and deadly disease that is difficult to diagnose and has limited treatment options available.

"Oncology represents an exciting new area and growth driver for our biopharmaceutical business," said Ludwig Hantson, Ph.D., president of Baxter BioScience. "With this new collaboration with Merrimack on MM-398, a promising new anti-cancer agent, we continue to augment our growing pipeline focused on challenging diseases with significant unmet needs, while capitalizing on our broad global reach."

Under the terms of the agreement, Merrimack receives a $100 million upfront payment from Baxter, which will be recorded by Baxter as a special pre-tax in-process research and development charge in the third quarter of 2014. Merrimack is also eligible to receive $120 million in regulatory milestone payments related to the first pancreatic cancer indication as these milestones are achieved, and $280 million in development and regulatory milestone payments for a second pancreatic cancer indication.

Merrimack is also eligible to receive $220 million in future development and regulatory milestone payments related to two additional indications. Merrimack has the potential to receive $250 million in sales milestone payments, as well as tiered royalties on net sales of MM-398 in the licensed geographies.

"Baxter possesses the commercial and technical expertise, experience and vision to obtain market approval and accelerate the global commercialization of MM-398 in markets all over the world for patients with metastatic pancreatic cancer who have few treatment options following gemcitabine-based therapy," said Robert Mulroy, President and CEO at Merrimack. "This partnership also complements our strategy by allowing us to develop our own commercial efforts in the United States while aggressively pursuing the development of MM-398 across multiple cancer indications.

MM-398 is a novel encapsulation of irinotecan in a long-circulating nanoliposomal formulation designed to increase drug deposition and prolong cytotoxic effects, with the goal of improving its anti-cancer properties. In May 2014, Merrimack announced that the Phase 3 trial, known as NAPOLI-1, studying MM-398 in combination with 5-fluorouracil (5-FU) and leucovorin achieved its primary and secondary endpoints for patients with metastatic pancreatic cancer who were previously treated with a gemcitabine-based therapy.

In the study, the combination of MM-398 with 5-FU and leucovorin demonstrated a statistically significant improvement in overall survival, progression free survival and overall response rate compared to the control arm of 5-FU and leucovorin alone. This was the first positive global Phase 3 study in a post-gemcitabine setting to show a survival benefit in this aggressive disease.

The U.S. Food and Drug Administration (FDA) and European Medicines Agency have granted MM-398 orphan drug designation in metastatic pancreatic cancer. Merrimack is planning to submit a New Drug Application for MM-398 with the FDA in 2014. Baxter expects to submit for regulatory approvals outside of the United States beginning in 2015.