Merrimack Pharmaceuticals, Inc. (MACK) fell 11.28% after the company announced that Sanofi (SNY) will give up its development and commercialization rights to oncology candidate, MM-121.

Sanofi decided to return the rights to MM-121 to Merrimack after the candidate failed to meet the primary endpoint in several studies. MM-121 was being evaluated in a number of indications including ER/PR+, HER2 negative breast cancer, ovarian cancer and non-small cell lung cancer.

In Nov 2013, the company had reported data from a phase II study evaluating MM-121 in combination with Aromasin in women suffering from metastatic breast cancer who had failed prior endocrine therapy. The study failed to meet the primary endpoint. However, the estimated hazard ratio for progression free survival in the overall study population trended in favor of the MM-121 arm.

MM-121 is a monoclonal antibody designed to block ErbB3 (HER3) activation in patients with heregulin-positive tumors. Merrimack stated in its press release that heregulin is associated with poor response to standard-of-care therapy and the combination of MM-121 may restore sensitivity in these extremely at-risk patients. Data from the phase II study suggested that the use of MM-121 in combination with standard-of-care therapies resulted in statistically significant reduction in the risk of progression in patients with heregulin-positive tumors.

Merrimack plans to continue MM-121 related development activities and look for a partner for this candidate. Meanwhile, for the next six months, Sanofi will continue funding the existing MM-121 phase II program.

Merrimack also announced top-line results from a randomized, exploratory phase II study on MM-121 in combination with paclitaxel followed by doxorubicin and cyclophosphamid in patients suffering from neoadjuvant breast cancer. In the second cohort, patients suffering from triple negative breast cancer, who received the combination of MM-121 and paclitaxel, achieved a pathologic complete response rate of 42.9% compared to 51.7% in the control arm.

Merrimack has three additional candidates in late stage preclinical development including MM-398 (phase III trial completed, post-gemcitabine pancreatic cancer). We believe investor focus will remain on Merrimack’s pipeline in the near term.

Merrimack carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector include Gilead Sciences Inc. (GILD) and Regeneron Pharmaceuticals, Inc. (REGN). Both Gilead and Regeneron hold a Zacks Rank #1 (Strong Buy).

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