Analyst Conference Summary

conference date: February 26, 2014 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2014 (Q4, fourth quarter 2014)

Forward-looking statements

Overview: Increased collaboration revenue, but stopped a Phase 2 MM-111 trial as ineffective.

Basic data (GAAP):

Revenue was $33.9 million, up slightly sequentially from $28.0 million, and % from $ million in the year-earlier quarter.

Net income was negative $9.7 million, up sequentially from negative $27.9 million, and up from negative $33.1 million year-earlier.

EPS was negative $0.09, sequentially from negative $0.27 and from negative $0.33 year-earlier.

Guidance:

Anticipates receipt of $66.5 million (net after payments to PharmaEngine) from Baxter for MM-398 milestone payments in 2015. With that and current cash should have sufficient funds to operate into 2016. "Any payments received from additional business development would further extend Merrimack's cash runway."

Conference Highlights:

All $33.9 million of revenue in the quarter was from collaborations. $23.4 million was from Sanofi MM-121 collaboration; $10.5 million was from MM-398 from Baxter.

Phase 2 trial of MM-111 for gastric cancer was stopped for ineffectiveness, which appeared to be because the majority of patients enrolled had insufficient heregulin levels. No additional MM-111 development is expected.

In November the initiation of a Phase 1 trial for 398 for brain cancer was announced. In 2015 a Phase 1 trial fro MM-398 for front line pancreatic cancer should commence.

HERMIONE Phase 2 trial for MM-302 for HER-2 positive breast cancer continued.

Upcoming milestones include submitting an NDA for MM-398 to the FDA by Q2 2015 for pancreatic cancer; presentation of Phase 3 results was made at an ASCO symposium in January. The FDA granted MM-398 fast track status for 2nd line metastatic adenocarcinoma of the pancreas. The NDA should be submitted to the FDA by early Q2 2015. Could gain approval as early as Q4 2015. Has begun commercial planning.

Merrimack will be initiating an MM-141 Phase 2 clinical trial in 2015 for pancreatic cancer, which last week was given orphan drugs status by the FDA.

A Phase 2 trial for MM-121 in heregulin positive non-small cell lung cancer was initiated this month. Merrimack's heregulin test will be used to identify the subjects. A path to registration for both lung and breast cancer has been laid out. The breast cancer planned trials will not start until funding is assured, but is in discussions with possible partners.

In the quarter data for MM-302, MM-121, MM-151, and MM-131 were presented.

A trial of MM-141 in front-line pancreatic cancer is planned to start in 2015.

See also the Merrimack Pipeline.

Cash and equivalents ended at $124.0 million, sequentially from $153.7 million, for a $29.7 million burn in the quarter. Lists $260.7 million in total liabilities.

Merrimack believes it has cash to fund operations into of 2016, assuming Baxter milestones are realized.

Operating expenses were $39.0 million, consisting of: $30.7 million for R&D; and $8.3 million for general and administrative expenses. Operating profit was negative $5.1 million. Other expenses (including non-cash imputed interest) were $4.4 million. Net loss was $9.7 million.

Q&A:

Front line MM-398 pancreatic cancer trial timeline? We are working with Baxter and investigators to form a design plan. Same with gastric cancer. The hope is to design studies that would support registration.

Heregulin levels in 111 trial, does that raise concerns about the diagnostic test or other pipeline candidates? We are still examining the data. There should be no impact on the rest of our pipeline. The failure was in finding patients 111 was designed to treat; our estimated of prevalence were wrong. We have confidence in our assay. The preclinical data for gastric cancer was misleading.

MM-151 plans? We hope to move it into colorectal cancer, but are working with external parties, and have no timeline to announce yet.

121 enrollment? We are optimistic itwill enroll quickly. It is a large population with a large unmet need.

Agenus believes the MM-398 study data being submitted is exceptionally robust.

Details on Baxter milestones in 2015? The revenue recognition comes after the cash inflows, which would be $66.5 million net. Cannot give details on milestones or pipelines, mixing continued development with regulatory development points.

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