Merrimack Pharmaceuticals Inc’s (NASDAQ:MACK) leading pipeline drug, ONIVYDE, an irinotecan liposome injection designed to treat patients suffering from metastatic pancreatic cancer, recently underperformed in second-quarter sales, a real miss that has investors skeptical on the biotech firm’s path of profitability.

BTIG analyst Ling Wang recognizes investor concerns, especially given a forecasted cash burn of about $50 million per quarter when MACK just closed second-quarter with cash flow of around $83 million, and therefore, reiterates a Neutral rating on MACK without listing a price target.

“With ONIVYDE 2Q16 sales falling short of Street consensus, we see investor concerns on the strength of MACK’s balance sheet and a potential near-term need for equity financing. After evaluating the balance sheet, various options for potential funds and projected ONIVYDE sales, we believe MACK should have sufficient recourse to fund operations until it obtains data from several key clinical programs, including the ONIVYDE Phase II frontline pancreatic cancer trial and pivotal MM-302 and MM-112 Phase II trials, especially with flexibility in containing operation expenses,” the analyst concludes.

Management cut $20 million in guidance for 2016 R&D and SG&A expenses to $205 to $225 million. Additionally, management indicates guidance of $46.5 million in net milestones related to ONIVYDE from its partner Shire for the rest of 2016. It remains early in the drug’s launch, so the firm has yet to provide sales guidance. However, Wang expects net sales of $135 million for the second half of 2016 leading into 2017, which he believes should offset over two consecutive quarters of cash burn.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Ling Wang is ranked #4,029 out of 4,147 analysts. Wang has a 28% success rate and faces a loss of 18.9% in his yearly returns. When recommending MACK, Wang loses 42.0% in average profits on the stock.

TipRanks analytics demonstrate MACK as a Buy. Based on 5 analysts polled in the last 3 months, 2 rate a Buy on MACK, while 3 maintain a Hold. The consensus price target stands at $9.33, marking a nearly 99% upside from where the stock is currently trading.Screen Shot 09-08-16 at 05.27 PM