On December 3, 2019 Merrimack Pharmaceuticals, Inc. (Nasdaq: MACK) reported that it received a $5 million milestone payment from Ipsen, triggered by Ipsen’s decision to progress the ongoing multi-part clinical trial evaluating ONIVYDE in patients with small-cell lung cancer into the second randomized portion of the trial focused on efficacy assessment (Press release, Merrimack, DEC 3, 2019, View Source [SID1234551890]). As a result of this milestone payment, Merrimack’s Board of Directors has authorized and declared a special cash dividend of $6.7 million on the Company’s common stock (the "Special Dividend").

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The Special Dividend is payable on December 23, 2019 to stockholders of record as of the close of business on December 16, 2019. The ex-dividend date for the Special Dividend will be December 13, 2019, the first business day preceding the record date. Stockholders of record on the record date who sell their shares prior to the ex-dividend date will not receive the Special Dividend. Based on the current number of shares outstanding, the Special Dividend will be approximately $0.50 per common share; this amount may vary based on the number of outstanding shares as of the record date.

Merrimack currently estimates that, for U.S. federal tax purposes, 100% of the Special Dividend (or approximately $0.50 per share) will likely be first treated as a return of capital to stockholders to the extent of their basis in Merrimack common stock, and then as capital gain.

The tax treatment of the Special Dividend will be based on Merrimack’s current and accumulated earnings and profits for Merrimack’s 2019 fiscal year ending December 31, 2019 ("FY19"). The process of determining current and accumulated earnings and profits requires a final determination of Merrimack’s financial results for FY19 and a review of certain other factors. The determination will be based in part on factors that are outside of the control of Merrimack and which cannot be ascertained at this time. Merrimack does not expect the calculation of the portion that will be treated as a taxable dividend for federal tax purposes to be finalized until after the completion of FY19. Accordingly, the portion of the Special Dividend estimated to be a taxable dividend provided in this release is based upon currently available information and is subject to change.

The precise tax impact of the Special Dividend to specific stockholders depends upon the stockholder’s individual tax situation. Stockholders are advised to consult with their personal tax advisors.

"The progress that we have made in streamlining our operating costs is reflected in the authorization of a special dividend higher than the amount of the milestone that we have received from Ipsen," said Gary Crocker, Chairman of Merrimack’s Board of Directors. "Our remaining cash balance is anticipated to support operations into 2027, when we estimate the longest-term potential Ipsen milestone may be achieved."