PRICING TERM SHEET

Dated as of July 11, 2013

Issuer Free Writing Prospectus
Filed Pursuant to Rule 433

Registration Statement No. 333-186369

Relating to the

Preliminary Prospectus Supplements dated July 10, 2013 to the

Prospectus dated February 8, 2013

 

Merrimack Pharmaceuticals, Inc.

Offering of

$125,000,000 aggregate principal amount of

4.50% Convertible Senior Notes due 2020

(the “Convertible Notes Offering”)

 

and

 

Offering of

5,000,000 shares of Common Stock, par value $0.01 per share

(the “Common Stock Offering”)

 

This pricing term sheet relates to the Convertible Notes Offering and Common Stock Offering described below and should be read together with (i) the preliminary prospectus supplement dated July 10, 2013 (including the documents incorporated by reference therein and the base prospectus in respect thereof) relating to the Convertible Notes Offering (the “Convertible Notes Preliminary Prospectus Supplement”) and (ii) the preliminary prospectus supplement dated July 10, 2013 (including the documents incorporated by reference therein and the base prospectus in respect thereof) relating to the Common Stock Offering (the “Common Stock Preliminary Prospectus Supplement,” and, together with the Convertible Notes Preliminary Prospectus Supplement, the “Preliminary Prospectus Supplements”). The information in this term sheet supersedes the information in each Preliminary Prospectus Supplement to the extent that it is inconsistent therewith. Terms used but not defined herein have the meanings ascribed to them in the relevant Preliminary Prospectus Supplement.

 

Convertible Notes Offering and Common Stock Offering

 

General:

 

The Convertible Notes Offering has been upsized from the previously announced size of $75,000,000 aggregate principal amount of the Issuer’s Notes (not including any exercise by the underwriters for the Convertible Notes Offering of their over-allotment option). See “Convertible Notes Offering” below. The Common Stock Offering has been downsized from the previously announced size of $50,000,000 of the Issuer’s Common Stock (not including any exercise by the underwriters for the Common Stock Offering of their option to purchase additional shares). See “Common Stock Offering” below.

 

 

 

Issuer:

 

Merrimack Pharmaceuticals, Inc.

 

 

 

Common Stock:

 

Common stock of the Issuer, par value $0.01 per share (NASDAQ: MACK)

 

 

 

Trade Date:

 

July 12, 2013

 

 

 

Settlement Date:

 

July 17, 2013

 

 

 

Use of Proceeds:

 

The Issuer estimates that the net proceeds from the Convertible Notes Offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Issuer, will be approximately $120.6 million (or approximately $138.8 million if the underwriters for the Convertible Notes Offering exercise in full their over-allotment option).

 

 

 

 

 

The Issuer estimates that the net proceeds from the Common Stock Offering,

 


 

 

 

after deducting underwriting discounts and commissions and estimated offering expenses payable by the Issuer, will be approximately $23.3 million (or approximately $26.8 million if the underwriters for the Common Stock Offering exercise in full their option to purchase additional shares).

 

The Issuer expects to use the net proceeds from the Convertible Notes Offering and the Common Stock Offering to complete the clinical development of, seek marketing approval for and fund preapproval commercial efforts for MM-398 for the treatment of patients with metastatic pancreatic cancer whose cancer has progressed on treatment with the chemotherapy drug gemcitabine, to partially fund the clinical development of the Issuer’s other clinical stage product candidates (including MM-398 for indications other than pancreatic cancer), to fund pre-clinical and research and development efforts and for other general corporate purposes.

 

 

 

Convertible Notes Offering

 

 

 

Notes:

 

4.50% Convertible Senior Notes due 2020

 

 

 

Offering Size:

 

$125,000,000 (or $143,750,000 if the underwriters for the Convertible Notes Offering exercise their over-allotment option in full)

 

 

 

Maturity Date:

 

July 15, 2020, unless earlier repurchased or converted

 

 

 

Public Offering Price:

 

100% of principal amount, plus accrued interest, if any, from the Settlement Date

 

 

 

Underwriting Discounts and Commissions:

 

3.25% of principal amount

 

 

 

Interest Rate:

 

4.50% per annum accruing from the Settlement Date, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2014

 

 

 

Conversion Premium:

 

25% above the Public Offering Price for the Common Stock Offering

 

 

 

Initial Conversion Rate:

 

160.0000 shares of Common Stock per $1,000 principal amount of Notes

 

 

 

Initial Conversion Price:

 

$6.25 per share of Common Stock

 

 

 

Increase in Conversion Rate Upon Conversion Upon a Make-Whole Fundamental Change:

 

The following table sets forth the number of additional shares by which the conversion rate will be increased per $1,000 principal amount of Notes for each stock price and effective date set forth below.

 

 

 

Stock price

 

Effective date

 

$5.00

 

$5.50

 

$6.25

 

$6.75

 

$7.50

 

$10.00

 

$12.50

 

$15.00

 

$17.50

 

$20.00

 

$22.50

 

$25.00

 

July 17, 2013

 

40.0000

 

34.4551

 

27.5747

 

24.0824

 

19.9587

 

11.6378

 

7.2779

 

4.6677

 

2.9915

 

1.8758

 

1.1015

 

0.5984

 

July 15, 2014

 

40.0000

 

33.8735

 

26.7581

 

23.2095

 

19.0833

 

10.9868

 

6.8537

 

4.3975

 

2.8197

 

1.7666

 

1.0544

 

0.5760

 

July 15, 2015

 

40.0000

 

33.0858

 

25.6486

 

22.0228

 

17.8924

 

10.1041

 

6.2817

 

4.0353

 

2.5905

 

1.6214

 

0.9629

 

0.5192

 

July 15, 2016

 

40.0000

 

32.1509

 

24.2259

 

20.4738

 

16.3207

 

8.9376

 

5.5330

 

3.5662

 

2.2974

 

1.4391

 

0.8520

 

0.4532

 

July 15, 2017

 

40.0000

 

30.7585

 

22.1770

 

18.2681

 

14.1129

 

7.3576

 

4.5384

 

2.9466

 

1.9101

 

1.1976

 

0.7043

 

0.3654

 

July 15, 2018

 

40.0000

 

28.6175

 

19.1323

 

15.0483

 

10.9775

 

5.2828

 

3.2759

 

2.1635

 

1.4190

 

0.8918

 

0.5189

 

0.2570

 

July 15, 2019

 

40.0000

 

25.2840

 

14.3154

 

10.0714

 

6.3924

 

2.7172

 

1.7589

 

1.1964

 

0.7992

 

0.5053

 

0.2892

 

0.1278

 

July 15, 2020

 

40.0000

 

21.8181

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

0.0000

 

 

The exact stock prices and effective dates may not be set forth in the table above, in which case:

 

·                  if the stock price is between two stock prices in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line interpolation between the

 

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number of additional shares set forth for the higher and lower stock prices and the earlier and later effective dates, as applicable, based on a 365-day year;

 

·                  if the stock price is greater than $25.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above as described under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the Convertible Notes Preliminary Prospectus Supplement), no additional shares will be added to the conversion rate; and

 

·                  if the stock price is less than $5.00 per share (subject to adjustment in the same manner as the stock prices set forth in the column headings of the table above as described under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the Convertible Notes Preliminary Prospectus Supplement), no additional shares will be added to the conversion rate.

 

Notwithstanding the foregoing, in no event will the conversion rate per $1,000 principal amount of Notes exceed 200.0000, subject to adjustment in the same manner as the conversion rate as set forth under “Description of Notes—Conversion Rights—Conversion Rate Adjustments” in the Convertible Notes Preliminary Prospectus Supplement.

 

CUSIP/ISIN:

 

590328AA8 / US590328AA86

 

 

 

Joint Book-Running Managers:

 

J.P. Morgan Securities LLC

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

 

 

 

Co-Manager:

 

Cowen and Company, LLC

 

 

 

Common Stock Offering

 

 

 

Shares Offered:

 

5,000,000 shares of Common Stock (or 5,750,000 shares if the underwriters for the Common Stock Offering exercise their option to purchase 750,000 additional shares in full)

 

 

 

Public Offering Price:

 

$5.00 per share of Common Stock

$25,000,000 in the aggregate (or $28,750,000 in the aggregate if the underwriters for the Common Stock Offering exercise their option to purchase 750,000 additional shares in full)

 

 

 

Shares of Common Stock Outstanding Following the Common Stock Offering:

 

101,428,154 shares (or 102,178,154 shares if the underwriters for the Common Stock Offering exercise their option to purchase 750,000 additional shares in full)

 

 

 

Underwriting Discount:

 

$0.30 per share of Common Stock

 

 

 

Joint Book-Running Managers:

 

J.P. Morgan Securities LLC

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

 

 

 

Lead Manager:

 

Cowen and Company, LLC

 

 

 

Co-Managers:

 

Oppenheimer & Co. Inc.

Guggenheim Securities, LLC

Brean Capital, LLC

 

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As Adjusted Financial Data:

 

After giving effect to the Convertible Notes Offering and the Common Stock Offering, as of March 31, 2013, the Issuer’s as adjusted cash and cash equivalents and marketable securities and the Issuer’s capitalization would have been as follows:

 

(Unaudited, in thousands)

 

 

 

Cash and cash equivalents

 

$

172,373

 

Marketable securities

 

58,252

 

Long-term debt, net

 

 

 

Loans payable

 

$

34,076

 

4.50% convertible senior notes due 2020

 

125,000

 

Total long-term debt

 

159,076

 

Non-controlling (deficit) interest

 

(73

)

Stockholders’ deficit:

 

 

 

Preferred stock

 

—

 

Common stock

 

1,009

 

Additional paid-in capital

 

460,513

 

Accumulated other comprehensive loss

 

(20

)

Accumulated deficit

 

(470,269

)

Total stockholders’ deficit

 

(8,767

)

Total capitalization

 

$

150,236

 

 

After giving effect to the Common Stock Offering (but not taking into account the Convertible Notes Offering), the Issuer’s net tangible book value at March 31, 2013 would have been $(25.9) million, or $(0.26) per share. This represents an immediate increase in net tangible book value of $0.21 per share to existing stockholders and an immediate dilution of $5.26 per share to investors in the Common Stock Offering.

 

The Issuer has filed a registration statement (including a prospectus dated February 8, 2013 and the Preliminary Prospectus Supplements dated July 10, 2013) with the Securities and Exchange Commission, or SEC, for the Convertible Notes Offering and the Common Stock Offering, to which this communication relates.  Before you invest, you should read the applicable Preliminary Prospectus Supplement, the accompanying prospectus and the other documents the Issuer has filed with the SEC for more complete information about the Issuer and the Convertible Notes Offering and the Common Stock Offering.  You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov.  Alternatively, the Issuer or any underwriter or dealer participating in the Convertible Notes Offering or the Common Stock Offering will arrange to send you the prospectus supplement and accompanying prospectus if you request them by contacting J.P. Morgan Securities LLC, Attn: Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, 866-803-9204; or BofA Merrill Lynch, Attn: Prospectus Department, 222 Broadway, New York, NY 10038, 866-500-5408, or email: dg.prospectus_requests@baml.com.

 

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED.  SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

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