Merrimack Pharmaceuticals Inc (NASDAQ: MACK)
Merrimack Pharmaceuticals is having a rough day in the market today, and for good reason. Amid the backdrop of a struggling company, they have chosen to cut a large portion of their workforce. On top of that, it was announced today that the current CEO of the company has made the decision to leave the company. Today, we’ll talk about the news, what we’re seeing from the stock as a result, and what we can expect to see from MACK moving forward.
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MACK CEO Resigns | Starts Workforce Reduction
As mentioned above, Marrimack Pharmaceuticals is having a rough day in the market today after making a big announcement. The announcement came in two parts. First and foremost, the current CEO of the company, Robert Mulroy, announced that he will be leaving the company. His stepping down is part of a major restructuring drive that is aimed at reducing expenses.
It was also announced that Mulroy will not be the only person leaving the company. In fact, MACK said that it will be cutting about 22% of its workforce of 426 employees. The cuts to the workforce will start today, and it is hoped by the company that the move will save about $200 million in costs over the next 2 years.
Finally, Gary Crocker will serve as the interim CEO while the company looks for a suitor for the position. Crocker is currently the Chairman of the Board at MACK and is well-suited for the interim CEO position. In a statement, he had the following to offer with regard to the news:
“The board is committed to focusing our resources. This major restructuring will allow us to strategically align our pipeline with our core capabilities and prioritize ongoing clinical development efforts while improving our financial flexibility.
We believe this sharper focus will drive efficiency and innovation and promote the interests of not only our shareholders and employees, but also of cancer patients worldwide. The realization of shareholder value will become as intense a focus for Merrimack as our strength in innovation and development. The board is convinced that there is tremendous inherent value within Merrimack that can be unlocked.”
What We’re Seeing From The Stock As A Result
As investors, one of the first things we learn is that the news moves the market. Unfortunately, the news released with regard to MACK was concerning. While the restructuring may lead to positivity in the future, there are currently more questions than there are answers. As a result, we’re seeing declines on the stock. Currently (11:37), the stock is trading at $5.96 per share after a loss of $0.38 per share (6.06%) thus far today.
What We Can Expect To See Moving Forward
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Moving forward, I have a relatively bearish opinion of what we can expect to see from Merrimack Pharmaceuticals. At the end of the day, the company is struggling; consistently operating at a loss is becoming too much weight to bear. As a result, the company is restructuring and doing everything it can to pick up the pieces and move forward. While the restructuring process is a strong move, the news leaves further questions with regard to how the pipeline will be structured and the next steps the company will take to work toward profitability. For these reasons, I believe that there is far too much risk to get involved in MACK at the moment.
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