UPDATE: Bank of America Downgrades Merrimack Pharmaceuticals Following Series of Disappointing Updates

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In a report published Friday, Bank of America analyst Rachel McMinn downgraded Merrimack Pharmaceuticals MACK from Buy to Neutral, and lowered the price target from $13.00 to $6.00.

In the report, Bank of America noted, “We are downgrading MACK from Buy to Neutral and lowering our PO from $13 to $6 following a series of disappointing updates discussed as part of the 2Q business update. We now have eroded conviction in the company's future pipeline data and management's ability to effectively communicate its objectives and strategy with investors, including: (1) failed interim outcomes for lung and ovarian cancer studies for the company's core development candidate MM-121, (2) conflicting management commentary on how they view MM-121 in lung cancer now vs. a few months ago and (3) a continuing shifting view of MM-121 development plans in breast cancer. While the failed MM-121 interim analyses were disclosed in connection with the capital raise last month, it was not well understood by the market until the 2Q report. We see the potential for substantial upside to shares if upcoming trial results for MM-398 in pancreatic or MM-121 in breast cancer exceed expectations, and would re-consider our rating following positive results and an understandable future development strategy. Key downside risks include additional trial failures and financing risk. Our PO moves from $13 to $6 on lower probability of success for MACK's pipeline.”

Merrimack Pharmaceuticals closed on Thursday at $3.95.

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Posted In: Analyst ColorDowngradesAnalyst RatingsBank of AmericaRachel McMinn
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