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Good morning, and welcome to Mersana Therapeutics First Quarter 2022 Conference Call and webcast. Currently all participants are in a listen-only mode. There will be a question answer session at the end of this call. I would now like to turn the call over to Jason Fredette, Senior Vice President, Investor Relations and Corporate Communications. Please proceed.

Good morning, everyone. Before we begin, I'd like to mention that our call will contain forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, those related to the company's business strategy, platform potential, clinical trial or preclinical study execution and data releases, regulatory plans and objectives, commercial opportunities 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 the company's annual report on Form 10-K filed with the Securities and Exchange Commission or SEC on February 28, 2022, and in subsequent SEC filings. These documents are available at sec.gov or on our website, mersana.com. Except as required by law, we assume no obligation to update forward-looking statements publicly even if new information becomes available in the future. With that, let me turn the call over to Anna Protopapas, Mersana's President and Chief Executive Officer.

Good morning, everyone, and welcome to our first quarter 2022 conference call. Joining me today with prepared remarks are our Chief Medical Officer, Arvin Yang, our Chief Science and Technology Officer, Tim Lowinger; and Chief Financial Officer, Brian DeSchuytner. I'm also joined by certain other members of management who will be available to answer questions. Before I start, I would like to officially welcome to Mersana our new Senior VP of Investor Relations and Corporate Communications, Jason Fredette. We are excited to have him on board. 2022 is shaping up to be an incredibly exciting year as we continue to advance UpRi, prepared to bring two exciting new candidates into the clinic to execute on our partnering strategy as we position Mersana for multiple imported data readouts in 2022. Let me start by describing the progress we have made on our goal of establishing UpRi as a foundational medicine for patients with ovarian cancer. We believe the clinical data we've shared in the past has demonstrated UpRi's efficacy and important tolerability advantages, namely the lap of severe neutropenia, neuropathy and ocular toxicity that has been reported with other ADCs. Our current slate of trials, UPLIFT, UP-NEXT and UPGRADE, have the potential to further validate this profile while also generating data across a broad range of ovarian cancer settings in an expeditious and capital-efficient manner. UPLIFT, our single-arm registration trial in platinum-resistant ovarian cancer, is on track to complete enrollment in the third quarter of this year, positioning us for a 2023 readout and potential BLA filing. As Arvin will discuss in further detail, we are pleased to have been selected for an oral presentation at the Society of Gynecological Oncology, or SGO, to share additional analysis supporting our dose selection for UPLIFT. UP-NEXT is our Phase III trial of UpRi monotherapy maintenance in NaPi2b high recurrent platinum-sensitive ovarian cancer, which is an even larger patient population with significant unmet need. Next has the potential to service a post-approval confirmatory trial in the U.S., support global registration and position UpRi as the first ADC in the platinum-sensitive space. An UPGRADE is our Phase I/II umbrella combination trial in earlier line platinum-sensitive patients. Initially, we're evaluating the combination of UpRi with carboplatin, followed by continuation of UpRi monotherapy. We believe the preliminary dose escalation data planned for late this year will provide valuable insights into UpRi's safety and tolerability in a combination setting, which could support our plans to expand into earlier lines of therapy. Beyond UpRi, we are advancing a pipeline in a thoughtful and capital-efficient manner with 1660 and 2056 being our primary focus. Both of these candidates are on track to move into the clinic in mid-2022. XMT-1660 is our Dolasynthen ADC directed at B7-H4. Preclinically, we have generated compelling efficacy data, demonstrating 1660's potential B7-H4 expressing tumors of high unmet need including breast, endometrial and ovarian cancer. These will be primary indications of focus as we move into Phase I. XMT-2056 is expected to be the second addition to our clinical pipeline this year and our first Immunosynthen STING-agonist ADC to the clinic. It targets HER2, a validated target broadly expressed in a range of solid tumors, including breast, gastric and non-small cell lung cancer. We have generated a robust preclinical data set, demonstrating 2056's potential to create a pipeline in a product with a single agent activity in both high and low HER2 expressing models. Given that 2056 targets and novel epitope of HER2, we believe it has the potential to be synergistic with other HER2 agents, including those that have become standard of care in breast cancer in newer agents like in HER2. Additionally, we have seen its potential to work in combination with checkpoint inhibitors in preclinical models. Now as many of you know, we also have been evaluating another NaPi2b-targeted ADC, XMT-1592, as a second short-term goal in non-small cell lung cancer. Given the lower prevalence of the NaPi2b biomarker in lung, the increasingly competitive nature of this indication, our commitment to remain financially disciplined and the substantial opportunities we see ahead for UpRi XMT-1660 and XMT-2056, we have decided to discontinue development of XMT-1592. In addition, we are deferring certain investments in our preclinical pipeline, including two of our earlier stage candidates, XMT-2068 and 2175, to focus our resources on Mersana's clinical pipeline. Our success with UpRi, XMT-1660 and 2056 has positioned us to have three candidates enabled by all three of our platforms, Dolaflexin, Dolasynthen and Immunosynthen in active clinical development this year. We view our platforms as capital efficient product engine to fuel our own pipeline and to position Mersana as the ADC partner of choice at this time when there is a surge of interest in the field. This, in turn, provides the opportunity to expand Mersana's reach and its ability to address patient needs while also bringing us nondilutive capital that can be redeployed in the business. And so we are off to a strong start in 2022 as we lay the foundation for what we hope will be a BLA filing and approval of UpRi in the not-to-distant future, important initial clinical data for 1660 and 2056 and additional potential value-creating partnerships. We are excited by the opportunities that lie ahead and we remain steadfastly focused on building value for patients who are waiting for new treatment options. With that, I would like to turn the call over to Arvin to delve deeper into UpRi and discuss our recent data at SGO.

Thank you, Anna. With strong support from both the GOG and ENGOT, the premier gynecologic oncology clinical trial networks in the U.S. and EU. We continue to make meaningful progress in advancing UpRi's development across the ovarian cancer treatment landscape. We remain on track to complete UPLIFT enrollment in the third quarter of this year and report data in 2023. If positive, we believe this data will support a BLA submission for UpRi in platinum-resistant disease. At SGO, we were pleased to present details of an analysis from our Phase I trial that bifurcated patients by dose groups, dose group 36 and dose group 43. This analysis reaffirmed 36 mg per meter square at the appropriate UPLIFT dose. Given its high efficacy, fewer Grade 3 or higher adverse events, and fewer adverse events in general, longer durations of treatment as well as fewer discontinuations to treatment-related adverse events, including discontinuation before first scan. The SGO presentation also helped to clarify that in dose group 36, only two patients were nonevaluable in the NaPi2b high population and four patients were nonevaluable in the overall population. Including these patients in an Intent To Treat or ITT analysis of the dose group 36, the overall response rate or ORR was 39% among patients with NaP2b high status and 31% among all patients. Both of these ORR figures are well above the 12% ORR seen with today's standard of care. Now turning to Phase III UP-NEXT trial that we expect will serve as our confirmatory trial. We are excited by its opportunity to position UpRi as a new ovarian cancer maintenance standard of care. Despite the approval of PARP inhibitors and bevacizumab, the unmet medical need remains high for patients who have been previously treated with a platinum doublet. Through constructive FDA and CHP interactions, we've designed UP-NEXT to enroll three important patient populations who are underserved by today's options. The first are patients who progress on a PARP inhibitor and bevacizumab, whether taken in combination or in sequence. Second are patients who are poorly served by today's median agents and are resorting to watch and wait as their best option. And the third are patients who achieved stable disease on platinum who are excluded from the PARP maintenance studies and consequently are excluded from treatment in the PARP inhibitor labels. We have optimized the study design to address the unmet need in the maintenance setting, including selecting for NaPi2b high patients and selecting a 30 mg per meter square dose And. We are pleased to share that we submitted our UP-NEXT protocol to site institutional review boards or IRBs, putting us on track to initiate patient screening for this trial by the end of Q2. In addition to our near-term plans to complete enrollment for UPLIFT and initiate UP-NEXT, we are planning to share interim combination data from our UPGRADE combination Phase I/II trial with carboplatinum in the fourth quarter of this year. UpRi safety and tolerability in combination will be the primary focus of this initial readout. Ultimately, we believe the combination therapy will be key to moving into earlier lines of ovarian cancer treatment. And finally, in parallel with all of these efforts, we are now gearing up to bring XMT-1660 and XMT-2056 into the clinic. To discuss these candidates further, let me turn the call over to Tim.

Thank you, Arvin. As you know, ADC innovation is at the very core of Mersana's strategy, and we have made significant progress in building out an innovative pipeline of potential cancer medicines. In fact, I've been here since Mersana's inception as an ADC company, and I can honestly say that I have never been more excited about where we are from both a technology and pipeline perspective. This is due both to UpRi's rapid progress and to the promise of our next clinical candidate, XMT-1660 and 2056. The preclinical data packages on these new molecules are very compelling, and we recently had the opportunity to share additional data on both of them at AACR. XMT-1660, our Dolasynthen ADC targeting B7-H4, has a precise and target optimized drug-to-antibody ratio of 6. Also, similar to UpRi, it leverages our clinically validated DolaLock microtubular inhibitor payload to provide a controlled bystander effect and what we believe will be a similar tolerability profile. At AACR, we showed in multiple patient-derived xenograft models that a single dose of 1660 has robust antitumor activity in both triple-negative breast cancer and estrogen receptor positive breast cancer. Further, the data demonstrate that B7-H4 expression is correlated with antitumor activity consistent with our desired target effect. As Anna mentioned, XMT-2056 is our first Immunosynthen STING-agonist ADC targeting HER2-expressing tumors. The preclinical data we presented at AACR shows that 2056 demonstrates robust antitumor activity as a monotherapy in both high and low HER2 expressing model. We also shared data demonstrating how 2056 may combine and provide even greater efficacy with established agents like trastuzumab, pertuzumab, anti-PD-1 or trastuzumab deruxtecan. The mechanistic data we presented on Immunosynthen provide a clear road map of its unique position and differentiation from other molecules targeting HER2. Additionally, we presented preclinical data at AACR elucidating how antitumor activity of Immunosynthen STING-agonist ADCs involve the targeted activation of the STING pathway in both tumor-resident immune cells and in tumor cells in an antigen binding dependent manner. This one-two punch is a strong differentiator for Immunosynthen versus other ADC-IO approaches, including those based on toll-like receptor or TLR agonists or those that directly target antigens on immune cells. To further investigate this approach, we conducted studies on patient tumor samples revealing that when combined with 2056 Ex vivo, myeloid cells present in the tumor activate the STING pathway and induce cancer cell death. Translational research like this provides us with a strong rationale and a great deal of excitement to begin investigating 1660 and 2056 in a clinical setting midyear. I'd now like to pass the call over to Brian to recap our financials. Brian?

Thank you, Tim. We summarized our first quarter financial results in this morning's press release, so let me focus in on just a few key items. As you all know, Mersana, like a majority of similarly situated biotechnology company, has now been operating amid challenging market conditions for a prolonged period of time. This has caused us to evaluate our expenses even more carefully, contributing to decisions like the one Anna described earlier related to XMT-1592 and the deferment of certain investments in XMT-2068 and XMT-2175. At the same time, we've been proactive in ensuring that Mersana has access to the capital that we require to continue advancing UpRi rapidly toward potential approval and to clinically demonstrate the strength of our Dolasynthen and Immunosynthen platforms. Our debt refinancing in late 2021, recent business development accomplishments and strategic use of the ATM are primary examples of the tools that have enabled us to keep Mersana on sound financial footing. Net cash used in operating activities for Q1 was $8 million. We ended the first quarter of 2022 with approximately $230 million in cash and cash equivalents. It should be noted that in April, we raised an additional $40 million in net proceeds from our ATM, primarily from investors with whom we have had long-term relationships who believe strongly in Mersana's prospects and who tend to have a long-term focus. Also, our line of credit with Oxford and SVB provides us with the opportunity to draw down an additional $35 million in low-cost capital at our option. As a reminder, we expect that there will continue to be quarter-to-quarter fluctuations in R&D spending related to CMC work as we approach our anticipated BLA filing. Factoring all of this in, we believe we have the financing required to fund our operating plan commitments well into the second half of 2023. Additionally, we continue to view collaborations as an important tool within our financing arsenal and believe that the potential exists for further business development transactions in the quarters to come. The Janssen agreement that was signed in the first quarter was a prime example of how our differentiated platforms can enable us to raise meaningful nondilutive capital while expanding the reach and validation of our platforms. With that, I'll now turn the call back to Anna.

Thank you, Brian. With a bolstered balance sheet and the progress we have made across our platforms and pipeline, we believe we're well positioned to execute upon our commitment of building a leading ADC company with a focus on benefit, both patients and shareholders. With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] First question comes from [Jonathan Chang] with SVB Leerink. Please go ahead.

First question, can you provide any color on how the UPLIFT enrollment has progressed? Is the study on track? Have you experienced any COVID and/or geopolitical related delays in the study?

Thanks, Jonathan. It's great to hear from you. So we remain on track. We're making good progress and we main on target in relationship to what we said about the Q3 timing.

And just second question. Can you expand on your high-level thoughts regarding the prioritization of the pipeline and resources? And specific to 1592, are there lessons learned from that program and experience that read through to UpRi?

So thank you, Jonathan, for the question. Our decision around 1592 really involved a number of factors. The role of NaPi2b lung cancer, as we learned from our UpRi lung cancer expansion cohort, the very competitive nature of this indication and the fact that we're pretty excited about not just UpRi but the potential of XMT-1660 and 2056. Focusing on UpRi 1660 and 2056 gives us a very diversified portfolio, both in terms of targets, platforms and indications. So that really drove our decision. Obviously, with every study we do, there are learnings and there are learnings we take from one study -- from one program to the next. So there were obviously learnings with 1592. And as we wind down the study and clean and lock the database, we'll have an opportunity to find the appropriate forum to disclose that data.

And just last question for me. Can you guys discuss how you're thinking about additional business development opportunities moving forward? .

Yes. Maybe I can take that. So the Janssen transaction, I think, really highlights what we can do with both our platforms and our products. We're sitting here in an ADC renaissance. A number of companies have recognized that they need ADCs as part of their armamentarium. And I think we have positioned ourselves through the innovation that Tim talked about to be one of the prime partners for these. And so we think about our BD strategy in three pillars: the platforms that are the -- cytotoxic platforms, whether it's Dolaflexin or Dolasynthen, where we can think about transactions that look similar to the Janssen transaction. The Immunosynthen platform where we -- for every company that is interested in ADCs as a modality, there's another company that has targeted an immune stimulation in their sweet spot, and that's a substrate for partnering as well. And obviously, there are six Immunosynthen assets that we've advanced to various stages, 2056 being the most advanced. We can't take all of those into the clinic on our own. So partners with the resources and the combination potential to really advance those would be interesting. Where we would be more reluctant to partner quickly is around UpRi where we don't want to cap the upside. We stand here with a fully owned first-in-class, only in class asset in a registration-enabling study. And we're very close to the sort of the next value inflection points around UpRi.

Your next question comes from Boris Peaker with Cowen. Please go ahead.

My first question is, from the timing and regulatory perspective, I believe the FDA wants to make sure that the confirmatory trial is well underway prior to approving accelerated application. So I'm just curious, how far do you anticipate UP-NEXT to be enrolled around the time of when you'd be submitting your BLA based on UPLIFT?

Yes. No, thanks for the question. And so first off, just to start off, as we've indicated in our press release, we remain on track in relationship initiation of the study in the Q2 front that we referenced. In regards to the enrollment, we've been in ongoing discussions, as would be typical in relationship to discussing with FDA in relationship to the start-up as well as the enrollment. So those are points that have already been discussed with the regulators in relationship to the confirmatory study. One thing to keep in mind, however, is that we're doing our confirmatory study in a different population relative to the UPLIFT, the platinum-resistant ovarian cancer space. This obviously differentiates us with some of the other ovarian competitive landscape trial designs. And this is advantageous from the standpoint of -- remember, this has not been a competing population in relationship to when the UPLIFT data becomes available, the confirmatory study, obviously, still serves and addresses an unmet need in relationship to interest in the study.

And my second question is for 1660 and 2056. Can you provide some sets on data expectation of what we should be seeing later this year, in the middle of the year?

So we have guided and are on track to be in the clinic dosing patients midyear. As for data disclosures beyond that, I think it's a little early for us to be providing that guidance.

Your next question comes from Jessica Fye with JPMorgan. Please go ahead.

This is Daniel for Jessica Fye. A couple of questions. Maybe to start with, regarding UPGRADE, can you provide the rationale for including all comers in the trial, including those with low expression of NaPi2b?

Yes. No, thanks for the question. And so keep in mind that in -- first off, starting in relationship to the data that we've seen from the expansion cohort. We do see that there's activity across the board, but there is enrichment in relationship to the high NaPi2b. And so in UPGRADE, as we're starting to combine with chemotherapy -- and keep in mind, the initial steps are here to evaluate, again, our differentiated profile and that potential for the nonoverlapping toxicities recognizing that we don't have what we've seen with the UpRi agent, the severe neutropenias, the peripheral neuropathies or with the ocular toxicities. So here in combination with carboplatin, which is a standard of care in the earlier line, the idea here is we'd like to see the activity in that broad population and then determine, obviously, ultimately, whether or not a biomarker on NaPi2b status would be useful in relationship to patient selection.

And then regarding the recently announced project OPTIMIST from the FDA, it seems that the FDA is focused on ensuring companies advance the right dose. Do you think the dose work you've done so far will satisfy the agency on this front?

Yes. So thank you for the question. I think we're -- I think our data selection and our dose selection is quite consistent in relationship to evaluating the multiple doses that project OPTIMIST is really focused on here. And remember, one of the core tenements of project OPTIMIST have been that it's not always necessarily the maximum tolerated dose, which is the optimal dose to move forward. And here, you can see that with the over almost 200 patients that have been evaluated in dose ranging, we've been able to robustly analyze the dose regimen that we believe can be optimal in relationship to bringing forward for patients.

One last question. Does the cash runway guidance of well into the second half of 2023, take into account the discontinuation of the 1592 program?

Yes, it does.

Your next question comes from Colleen Kusy with Baird. Your line is open.

So for the UP-NEXT trial, what are you stratifying for in the enrollment? And can you remind us the expectations for the placebo arm in that population? And would it depend on the breakdown of the percent of the three different populations you're looking to enroll? And then I have a follow-up.

So let me break down the question a little bit first. And just to remind the audience in relationship to the UP-NEXT study or confirmatory study, this is in the recurrent platinum-sensitive space and we are selecting for high NaPi2b patients. And so in regards to the stratification, we've essentially, based upon the sample size, determined the most important prognostic stratifiers in relationship to those patients in order to then ensure the balance. Because to your point, we are looking at multiple different populations, but where these populations all have standard of care as essentially vigilant observation as an acceptable standard of care for those patients. And that actually speaks to your second question about the placebo in relationship to that standard of care or what that time period would be. And so keep in mind that, that recurrent space, given the PARP inhibitor utilization and the bad utilization in the earlier line space, that period is actually relatively short in relationship to progression-free survival. We haven't been sharing the actual time frames associated with that. But you can imagine that in the recurrent space, it's relatively short.

And for the UPGRADE trial, what is the dose escalation regimen you're using? And do you think you'll be at an effective dose by the time of the readout in 4Q?

Yes. So we are using an approved dose of the carboplatinum and it's consistent with dose escalation studies in the Phase I setting where, obviously, the goal here is to ensure the safety tolerability initially and then at a defined dose, start to evaluate the efficacy. We're starting with the approved doses of carboplatinum and then we're dose escalating the UpRi dose regimen. And keep in mind that we have seen activity down as low as 20 milligrams per meter squared with UpRi as we're going through this. And so as you get into Q4, to level set upon the expectations in that time frame, this will be our initial or interim of the dose escalation period. And so the key here is to evaluate the safety and tolerability in the combination with carboplatinum.

And one last one, if I can. Just at a higher level, while you're thinking about moving UpRi into earlier lines of ovarian, do you have data on how platinum exposure might impact the expression of NaPi2b, if at all?

Yes. It's a great question. And so what we've seen from not only our expansion dose cohorts but an expansion cohorts, but as well as additional tumor banks, is that NaPi2b is a lineage marker. And the expression level appears to be consistent through time, which also means that through intervening therapies, including platinum therapies. And thus, the expectations would be that the NaPi2b expression would remain consistently high, which represents about two-thirds of the population as we described in our expansion cohort of whether it be in the late line setting or in the earlier line setting, including the platinum sensitive space.

Our next question comes from David Nierengarten with Wedbush Securities. Please go ahead.

Most of mine have been asked, but I was curious on developing 2056 HER2 Immunosynthen. I know it's differentiated from other HER2-targeting agents in its mechanism, but HER2 is also a crowded development space. So I was wondering if you were -- I don't want to say targeting that to business development, but if you were thinking that, that might be one of a prime business development opportunities just looking at your pipeline and what is interesting that might be relatively expensive development pathway? .

Sure. I mean as we remarked before, when we think about our Immunosynthen assets, there are potential partnerships around both the platform, platform access similar to the Janssen, or there could be partnerships around the Immunosynthen products. For that molecule, we're really excited about it because, one, I think we've been -- Tim and the team have generated really tremendous preclinical data demonstrating a third-party therapeutic index. But we're using a novel antibody that is not competitive in binding with the existing HER2-directed agents. And then a third component of this, David, which I think is really important, is that we're using HER2 with a docking station, right? The objective here is not to interrupt HER2 signaling. And so that means that the universe of potential applications of this may be much broader than where HER2 agents are studied today. And so all of those things are pieces that we would explore as part of that Phase I dose escalation.

And maybe if I could sneak a follow-up in then, are there any maybe less competitive indications you might be thinking about focusing on or we have to wait and see from the Phase I?

I mean I can speak to that just in relationship to the tumor types in our dose escalation. As you know, HER2 is expressed, as you just indicated, in a variety of tumor types. And so we'll be evaluating. I mean, the three that I would flag right now include breast cancer, gastric as well as non-small cell. But we also will be evaluating additional tumor types, including the bladder cancers and other tumor types that may express HER2. And back to Brian's point, just in relationship to keeping in mind that this is really a docking station. And because of such, the expression levels may matter less relative to other HER2-targeted therapies where inhibiting the biologic pathway has been the primary modality of action. I think the success in HER2 -- in the HER2 low is probably the best prime example in relationship to when using it as a docking station, you potentially can address a HER2-low population. And so these are some of the hypotheses that we'll pursue as we're going into the clinic.

And I would add, Dave, that you appropriately have identified that this is a product that could really be a pipeline in a product. There are so many different potential opportunities if we can really realize in the clinic what we saw preclinically. So it might very well be a good candidate for partnering, but it could be now, it could be in the future. We can build value along the way as we move it into dose escalation and through the early proof-of-concept studies.

And our last question is from Kaveri Pohlman with BTIG. Please proceed.

Regarding the UPLIFT trial, I believe the trial was started with patient enrollment in the 43 mg per meter square dose cohort. Will those patients be included in the ITT population? And my second question is also regarding the UPLIFT study. If you could talk about the pneumonitis protocol you have implemented to mitigate the adverse events.

Let me start with the first question. And just to clarify, we had initially started with a 43 mg per meter squared dose regimen. And then based upon the 200 patients evaluation and so forth, we had shifted to the 36 mg per meter square, what we consider to be the optimal dose regimen to move forward. So the 36 dose cohort will be used as the efficacy population. Now obviously, the totality of data will always be utilized in order to characterize the safety profile. So I just wanted to give you context in relationships with the two different doses and how the data will be utilized. Now shifting gears to the question you had about the pneumonitis management algorithms and so forth. I think it starts actually from the standpoint of the learnings we've had from our expansion cohorts in relationship to, a, ensuring the inclusion criteria are set up in such a way that minimizes the potential that you have patients with less pulmonary reserve or the ability to essentially, if they were to develop the rare frequencies of pneumonitis, overcome it per se or have that runway. But then the management algorithm itself is really quite standard from the standpoint of, first, identifying. So educating the physicians who are quite comfortable and knowledgeable with pneumonitis. But in the early days, we're probably less aware that this was a potential risk. So identification and then ultimately, management, whether that be through dose reductions, dose delays, discontinuations or as well as additional interventions such as steroids. I hope that answered your question.

And with that, ladies and gentlemen, we end our Q&A. I will pass the call back to Anna Protopapas for her final remarks.

Thank you, everyone, for listening. We look forward to keeping you up to date on our progress and hopefully starting to see more of you in person on the conference circuit in the weeks ahead. Until then, thank you for your continued support.