By Carl O'Donnell and Greg Roumeliotis
(Reuters) - U.S. cancer drug developer Merrimack Pharmaceuticals Inc (O:MACK) is close to selling its most developed products to French peer Ipsen SA (PA:IPN) in a deal that could be worth more than $1 billion, people familiar with the matter said on Sunday.
The deal would give Merrimack the resources to fund the development of three new compounds targeting pancreatic, lung, and other types of cancers. It would boost Ipsen's portfolio, which has traditionally focussed on endocrinology.
Under the terms of the deal that could be announced as early as Monday, Ipsen would acquire Merrimack's pancreatic cancer treatment Onivyde, as well as Doxil, a generic ovarian cancer drug Merrimack developed in partnership with Teva Pharmaceutical (NYSE:TEVA) Industries Ltd (TA:TEVA) unit Actavis LLC, the sources said.
Merrimack would be paid upfront in cash for a little more than half of the deal's value, and would stand to receive the remainder of the potentially more than $1 billion consideration in milestone payments, the sources added.
Merrimack would use the proceeds to fund research and development, pay down debt, and declare a special dividend to shareholders, according to the sources.
The sources asked not to be identified because the deal has not yet been announced. Merrimack and Ipsen did not immediately respond to requests for comment.
Merrimack announced last October that Chief Executive Officer Robert Mulroy would step down. Merrimack named Chairman Gary Crocker as interim CEO and launched a search for a chief. It has yet to announce a permanent replacement.
The Cambridge, Massachusetts-based company also plans to restructure operations, included slashing costs by $200 million over the next two years and slimming down its development pipeline.
The company, which has a market capitalisation of $467 million, has cut 22 percent of its workforce.
In December, Merrimack said it was cancelling its research efforts on a compound called MM-302 that would have been a potential treatment for breast cancer.
Merrimack received regulatory approval to launch Onivyde in the United States late in 2015, and has been ramping up its sales efforts.
Ipsen has been looking for acquisitions and tie-ups to strengthen its presence in the United States, the world's biggest pharmaceutical market, where it generates only a small percentage of sales.
The Paris-based company had so far counted on Somatuline, which is currently the only drug approved in the United States to treat neuroendocrine tumors, to anchor itself in the Americas.