When David Meek took the top job at the oncology-oriented Ipsen last October, he pledged to help the French drugmaker achieve its goal to be generating a third of its revenues in the U.S. by 2020. To that end, the drugmaker has reached an agreement to buy the underperforming pancreatic cancer drug of U.S.-based Merrimack Pharmaceuticals in a deal that could top $1 billion.
Ipsen, which has been building its U.S. presence for several years, will pay Merrimack $575 million in cash when the deal closes, which is expected by the end of the quarter, and up to $450 million in additional milestone payments.
For that, Ipsen gets the U.S. rights to current and future uses of Onivyde, as well as the licensing agreement with Shire for rights to the drug outside the U.S. It also gets Merrimack’s U.S. manufacturing operations and will take on about 100 employees, mostly in manufacturing, but also a few commercial employees as well as some in R&D. Ipsen will also add Merrimack’s generic version of ovarian cancer drug Doxil.
In the announcement, Meek said that the acquisition of Onivyde would strengthen Ipsen’s oncology portfolio and allow the company to build on its U.S. sales infrastructure. The company has about 130 U.S. employees now.
“We have a growing U.S. oncology presence,” the CEO said in a call Monday with analysts.
Ipsen expects the deal to be slightly dilutive this year to add significantly to earnings in 2018 with growth in its current indication and “long-term upside to financial performance from potential additional indications.” Onivyde is in trials for untreated metastatic pancreatic cancer, as well as in relapsed small cell lung cancer and breast cancer.
Onivyde, which was approved in the U.S. in October 2015, had U.S. sales in the third quarter of $14.5 million, a figure that Merrimack's board found unacceptable, leading it to oust CEO Robert Mulroy. The Cambridge, Massachusetts-based biotech is now cutting about 80% of its staff and using the money from Ipsen to refocus on clinical-stage work.
Meek was named CEO of Ipsen in October after losing his job as head of Baxalta’s oncology operations following its acquisition by Shire, the company with which Ipsen will now be collaborating on Onivyde. The American was brought on in large part to help Ipsen continue to build a presence in the U.S.
In 2015, Ipsen’s U.S. sales were only €157.9, amounting to about 11% of its €1.444 billion total. But the drugmaker has said it intends to boost that to 30% over the next few years. Even before Meek came on, Ipsen had started building on its U.S. oncology assets with an $855 million deal in March 2016 to pick up the cancer drug cabozantinib from Bay Area-based biotech Exelixis.