Mersana Therapeutics, Inc. Price & Performance (MRSN)

Thank you, operator, and good morning, everyone. Before we begin, please note that this call will contain forward looking statements within the meaning of federal securities laws. These statements may include, but are not limited to, those related to the potential clinical benefits of our product candidates and platforms, our clinical trial progress and designs, dosing and patient management strategies addressable market opportunities, anticipated milestones and data disclosures, and cash runway. Each of these forward looking statements is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. These risks and uncertainties are discussed in our quarterly report on Form 10 Q filed with the Securities and Exchange Commission on November 13, 2024, and in subsequent SEC filings. Our filings are available at sec.gov and on our website mersana.com Mersana. Except as required by law, we assume no obligation to update forward looking statements. Publicly even if new information becomes available in the future. On today's call, we have Mersana's Chief Executive Officer, Doctor. Marty Huber and our Chief Operating Officer and Chief Financial Officer, Brian De Scheitner. With that, let me turn the call over to Marty to begin the discussion.

Thank you, Jason, and good morning, everyone. Over the past several months, we have accomplished a great deal here at Mersana Mersana. Most notably with our lead dolacentin ADC Emily, we reported positive initial clinical data started the expansion portion of our Phase one trial and were granted an additional fast track designation for a growing portion the breast cancer population, that has previously been treated with a toploisomerase one inhibitor or TOPO-one ADC. At the same time, we advanced Phase one dose escalation with XMT-two thousand and fifty six Our lead immunosynthin ADC, while also supporting our collaborators. Let's focus first on Emily. MERSANA's ADC targeting B7H4. In January, we reported initial clinical data from one hundred and thirty patients who were enrolled in Doses escalation and backfill cohorts as of December 13, 2024 data cutoff. From a safety and tolerability standpoint, Emile was observed to be highly differentiated within the ADC space. The most common treatment related adverse events of INEGRADE were transient increases in AST, generally asymptomatic and reversible proteinuria, generally low grade nausea and low grade fatigue. Importantly, unlike many other ADCs, we did not see dose limiting neutropenia, neuropathy, ocular toxicity interstitial lung disease, or thrombocytopenia.

This provides us with the confidence that EMILY could have an attractive monotherapy profile Just as importantly, we believe it also could enable combinations with standards of care like platinum chemotherapy and other ADCs that our competitors would be challenged to pursue. From a clinical activity standpoint, confirmed objective responses were observed in all enrolled tumor types. These included patients with triple negative and hormone receptor positive breast cancer, endometrial cancer, ovarian cancer and adenoid cystic carcinoma type one otherwise known as ACC1. At intermediate doses, which range from about thirty eight mgs to sixty seven mgs per meter squared, or about one to two milligrams per kilogram the confirmed objective response rate was twenty three percent across all tumor types. With high E7H4 expression. Which we defined as an IHC score of seventy percent or more. Focusing specifically on the evaluable patients in this dose range with B7H4 high triple negative breast cancer, The confirmed ORR was also twenty three percent. At the end of twenty twenty four, we initiated the expansion portion of our trial in patients with TNBC have previously been treated with at least one TOPO-one ADC. A population with a very high unmet need. We believe we are positioned for success for a few key reasons.

The first is the dose we're utilizing, the second is our inclusion criteria, Third is the standard of care for these patients Today, And the final factor is the competitive environment in which we are operating. Let's begin with the dose. Generally speaking, as you might expect, we have seen that clinical activity tends to increase along with EMILIES dose. As I mentioned, the twenty three percent ORR we observed was generated across a range of doses, from about thirty eight to sixty seven mg per liter squared. We have brought the top dose from this range specifically sixty seven point four mgm2 every four weeks into expansion. As we previously reported, this particular dose was well tolerated. Additionally, each of the four B7H4 high patients who received this dose achieved target lesion reductions and each also remained on treatment for durations of approximately sixteen weeks or more as of the data cutoff. A second factor that can influence response is prior treatment. This is well established in oncology. And specifically in triple negative breast cancer. As a reminder, the twenty three percent ORR that we observed with Emily and TNBC was generated in a population of 13 evaluable patients.

Twelve of these patients received more than three lines of prior therapy. And all had received at least one TOPO-1ADC. These data compare favorably to historical benchmarks. For instance, a twenty three percent ORR was also seen with Tridelby and TNBC patients received more than three prior lines of therapy in the [indiscernible] but of course this was in a topo naive setting. Tridelby's ORR increased to nearly forty percent in patients received only two or three prior lines of therapy. In expansion, we are limiting enrollment to patients with a maximum of four prior lines while also mandating that at least one prior treatment must have been a TOPO-180C. It is also important to keep in mind what the standard of care is in TMBC today. In a sense, the control arm which was single agent chemo had an ORR of only about 5%. And finally, there is the competitive environment. We view recent developments within the B7H4ADC Landscape. As favorable for Emily. Most notably, the company that we have viewed as our primary would be competitor within the breast cancer space Pfizer, recently announced that it had discontinued development of its B7 H4ADC candidate. The other B7H4ADCs that are at a similar stage of clinical development as us all have TOPO-one payloads.

As a result, unlike Emily, we believe they are subject to TOPO-one resistance mechanisms. In fact, some of these companies appear to be excluding patients have received prior TOPO-one therapies from their clinical trials. This positions EMILY as the most advanced or statin ADC in the class. Which provides us with a significant opportunity in breast cancer.

We are pleased with the level of investigator interest and engagement we are seeing. And while CNBC is our immediate focus, given the clinical activity we have seen across all tumor types, we are excited by EMILY's potential in other indications as well. And so, enrollment continues at our initial expansion dose of sixty seven point four milligrams per meter squared We also continue to investigate doses up to ninety five milligrams per meter squared in escalation of backfill cohorts [indiscernible] we're pleased to report that we officially amended our clinical trial protocol in late January, as we seek to mitigate the proteinuria related dose that we were seeing at high doses. We expect these efforts will help us identify a second dose for our second expansion cohort in post TOPO-one TNBC later this year. And we plan to present additional data from dose escalation of backfill later this year as well. Moving on to other areas. We also have advanced the dose escalation portion of our Phase one clinical trial of XMT-two thousand and fifty six in recent months. This candidate's ability to selectively activate the STING pathway in HER2 expressing tumors. And finally, would like to note that we continue to make solid progress in our Dolosintan research collaboration with J and J and our immunosynthetic research collaboration with Mark KGaA.

With that, let's turn things over to Brian for some color on our financials. Thank you, Marty. Beginning with our balance sheet, we ended 2024 with $134,600,000 in cash, cash equivalents and marketable continue to expect that our capital resources will support our current operating plan commitments into 2026. Please note that our cash runway guidance does not assume any future milestone payments that we may earn from our current collaborations or proceeds that we may realize from future collaborations. Net cash used in operating activities for the fourth quarter of twenty four was $19,300,000 which is down significantly from $32,000,000 in net cash used in operating activities during the year ago quarter. This decrease primarily reflects our portfolio reprioritization efforts, including the OpEx reductions we implemented in the second half of twenty twenty three as part of our restructuring. Turning to our income statement, collaboration revenue for the fourth quarter of twenty twenty four was $16,400,000 compared to $10,700,000 for the same period in 2023. The year over year change was primarily related to increased collaboration revenue recognized under our agreements with J and J, [indiscernible] and GSK. Research and development expenses for the fourth quarter of twenty twenty four were $2,300,000 compared to $21,500,000 for the same period in 2023.

For the most recent quarter, approximately $1,700,000 of this spending was related to non cash stock based compensation. The year over year change was primarily related to increased costs associated with manufacturing and clinical development activities for Amelie were partially offset by reduced costs related to clinical development activities for our discontinued candidate General and administrative expenses for the fourth quarter of twenty twenty four declined to $8,900,000 compared to $10,100,000 during the same period in 2023.

Approximately $1,700,000 in non cash stock based compensation expenses were included in G and A for the most recent quarter. The year over year decline was primarily related to reduced employee compensation expenses, following our restructuring in 2023 and reduced consulting and professional services fees. And finally, Mersana's net loss for the fourth quarter of twenty twenty four was $14,100,000 compared to a net loss of $19,500,000 for the same period in 2023. That concludes our business update. Operator, would you please open the call to questions from the audience?

We will now begin the question The first question today comes from Jonathan Chang with Leerink Partners. Please go ahead. Hi. This is Yandere Li for Jonathan Chang. Thanks for taking my question. So the first question I have is that, could you share the latest progress on how you are mitigating the ASD ALT elevation? And proteinuria issue related to AMLII? And how do you think that might increase your confidence in maintaining the dose intensity a higher dose level Thank you for the question. I'll start with the AST then go into proteinuria.

And then get your last question. So with regards to AST, AST does not result in meaningful amounts of dose delays. And even if a patient does have a delay, it's only about a week. So at this point in time, AST is a transient reversible phenomena that is not having a meaningful impact on our ability to deliver dose. With regards to proteinuria, just to reiterate, that is primarily a challenge or leading to dose delays only at the highest dose range. So what we're currently doing is as we mentioned, had an amendment to the protocol which does several things. One, it puts in place mitigation such as ACE inhibitors, ARBs early in a kind of a prophylactic manner to minimize development of proteinuria but importantly, [indiscernible] in the setting of when proteinuria does occur, but it is asymptomatic in that a patient is not having edema, not having they're not having any serum hypoalpinemia or serum peratina changes, for those patients we're able to maintain dosing by doing a dose reduction as opposed to a dose delay. So we are we look forward to testing that in the clinic to show that we are able to maintain dose intensity.

The clinical outcome will Okay. Doing the experiment Now, Got it. And just a quick follow-up on the proteinuria I think on the separate call, you did mention that it was related to protocytoplasty do you think that's caused by the damage for on target or off target is like Just curious about the mechanism.

We don't at this point in time, we believe it is off target. Other or satin payloads that are not for B7H4 have been observed to have albuminuria of the same type of potent side effect.

Thanks for taking my question. The next question comes from Charles Hsu with LifeSci Capital.

Please go ahead.

Hey, good morning, everyone.

Thanks for taking our questions for the call and hope everyone had a great weekend. Regarding your dose expansion criteria, of having patients with one to four prior lines of therapy, What's your sense of the distribution of patients that you might be getting that has fewer call it, one to two as opposed to more call it three to four prior lines of therapy.

I think it's too early to get that read. I mean, we opened it in the study and We're still gathering data I think it would be premature for me to give guidance on what we think are the lines that are actually going to be in the population. One thing I think we checked one thing we can clearly say is [indiscernible] those patients who have previously been on with five, six or seven are excluded from expansion. So at a minimum, it will ensure that patients don't have more than four prior lives. Is part of the protocol.

Got it, great. Thank you for that Maybe one quick follow-up right now. I guess then like I think you went through this a little bit as well, but to what extent your second dose, your second go forward dose, the identification of that be dependent on your ability to mitigate proteinuria. So you've already selected sixty seven point three the intermediate range. Is there a scenario where you go for something, let's call it, in the middle to the higher end of your high dose range if your proteinuria mitigations works very well is there an alternative scenario where you could end up maybe selecting even a separate dose beyond that? Thank you. [indiscernible] at this point in time, we are setting doses up to ninety five milligrams per meter squared. So we are not exploring anything higher than that at this point in time.

Got it. Thank you for taking the questions.

The next question comes from Michael Schmidt with Guggenheim. Please go ahead.

Hey, good morning. Thanks for taking my question. This is Paul on for Michael. I wanted to take expand a bit on how you're currently thinking about establishing the final biomarker cutoff Is it reasonable to expect wherever you land on TPS score to still capture roughly half of the TNBC population? Or could there still be a meaningful swing factor how you're thinking about B7 and H4 high? [indiscernible] I think while we continue to explore it, I would be surprised if it's outside of that 40% plus or minus rate 40% to 50% at the upper limit. Is most likely where we'll end up It would be to me, it would be very surprising if we end up with more than 50 or substantially less than 40. But and with the TCI I'm sorry, for Mersana of proportion of the population, the TPS score could be best TDD. What the actual percent TBS Tumor proportioned score number is.

Got it. And then just as a follow-up, can you set some expectations for the updated Phase one dose escalation and backfill data later this year? Which dose levels are in focus for enrollment, how many additional patients of data could we potentially Yes. This is Jason. We haven't defined that. What we've said is we plan to present additional ESCO in we're looking at doses up to ninety five mgs per meter squared. But we haven't defined how much incremental data would be in that in that readout. The next question comes from Andy Shey with William Blair.

Please go ahead.

Great. Thanks for taking our questions. Just one quick one for us.

Just looking at the updated deck, I think the only thing that changed is the competitive landscape. Marty, I think you mentioned a little bit in your prepared remarks about about the evolving competitive landscape. But I'm curious if you can kind of dive in deeper about some of the competitors that went to [indiscernible] hoping to hear a little bit more from you. Thank you.

I'm going to let Brian give you more detailed answer on that one. Yes. As Marty articulated, we believe that EMILY's very well positioned in the V7 H4 space. As you noted with the departure of one of our competitors, we're the most advanced orastatin B7 H4 in development. We're the only company that is shared initial positive efficacy data in that post opo breast cancer setting. As you remark, one competitor is moving into a pivotal study in a gynecologic tumor. I think we feel like this is very encouraging because it's a additional validation. That you can see meaningful activity on that target.

But several Cotopo competitors very much focused on on ovarian and endometrial at that at this stage. So we believe one, in EMLEE's potential as monotherapy, We also believe that our safety and tolerability profile may afford us an opportunity to combine with things like platinum chemo and other ADCs and we think long term as a set of development opportunities, some of our competitors might be very challenged to pursue those combinations. And so I think as we look at the overall competitive landscape, we view it very favorably.

The next question comes from Astika Gunawarden with Truist. Please go ahead.

Hey, good morning guys. Thanks for taking my questions. Two quick ones.

If I may. Could you give us a little bit of clarity on when we could expect some of the expansion cohort data to 67 mgs? And then when you presented data early this year, we looked at three different intervals the Q3, the Q4 and then a two on, two off.

I'm curious if you're looking at other intervals maybe like a three on, one off or any other types of other formats as well just to kind of ahead of the collection, the dosing, This is Marty. I'll answer the second one first.

At this point in time, we are not studying any schedules beyond what we previously shared. We are continuing to explore different schedules at this point in time, but they're limited to the three we've already shared. And with regards to expansion, we are not giving any further details on type of expansion. Other than to say that we are continuing to enroll patients and investigators remain enthusiastic about the study.

The next question comes from Collyn Koozie with Baird. Please go ahead.

This is Nick on for calling. Thanks for taking our question. So for 56, just wanted to ask what you have to show on the PD update and if there's a ballpark on how many patients or how much follow-up you might have and if we can might see any early efficacy efficacy data at that time as well? Thanks.

We're not going into any detail beyond the fact that our primary objective will be to share pharmacodynamic data. Showing that we're getting activation of the same pathway in HER2 positive tumors.

As far as any other details, we're not sharing at this point in time. The next question comes from Justin Zelen with BTIG.

Please go ahead. Great. Thanks for taking the question. This is Gede on for Justin.

I believe you had said you're going up to ninety five mgs per meter squared, but I do believe there was a one hundred and fifteen mg dose Was there any reason why one hundred and fifteen isn't being explored further? And will we see a meaningful number Well, I think well, first of all, we are not studying one hundred and fifteen any further. The one hundred and fifteen dose, we did observe the we saw was reversible, but we didn't see grade three ASC in two of the three patients.

And while we could have potentially explored that further, we made the decision that we were not going to because we were getting the exposures we were targeting at 95 and below. So our focus has been a cap of the 95 every four weeks or the variations of that.

And on the second question in terms of again, additional escalation and backfill data What we'll show is somewhat time dependent, right, in terms of when we plan to share data. So we're not providing any additional specific Got it. And maybe a follow-up. With the Pfizer Pro [indiscernible] the Pfizer study as well as yours? And if so, how do they compare the two agents so far? Well, they're not going to give us details of confidential data from Pfizer. I think the main thing has been at this point in time, we had already heard from the investigators and the KOLs that Pfizer was not going to pursue their B7H4 and TNBC post topo.

That was known even before they discontinued the program overall.

And so we were being approached by investigators to participate in our study. Because they have if they when they basically heard through the grapevine be frank, even before our data was disclosed, because we meet with these investigators, we have them under CDAs, They looked at our data as a promising opportunity in TMVC post topo And to be frank, it was the only game in town for their patients. So that's why we had several of those sites actively decide to join our study.

Far as the actual data that Pfizer had in this population, they did not share that with us other than once again other than to state that Pfizer was not pursuing this indication.

This concludes our question and answer session. I would like to turn the conference back over to CEO, Doctor. Marty Huber for any closing remarks.

Thank you, operator, and thanks everyone for dialing in. We We look forward to seeing many of you at the TD Cowen Healthcare Conference here in Boston tomorrow. As well as at LYRX Healthcare Conference in Miami, next week. That concludes our call operator. Thank you.

The conference has now concluded. Thank you for attending today's presentation.