Eva Jack – Chief Business Officer Anna Protopapas – Chief Executive Officer Tim Lowinger – Chief Scientific Officer David Spellman – Chief Financial Officer.

Michael Ulz – Robert W. Baird Jonathan Chang – Leerink Partners Boris Peaker – Cowen Dilip Joseph – Wedbush Debjit Chattopadhyay – H.C. Wainwright.

Good afternoon and welcome to the Mersana Therapeutics’ First Quarter 2018 Conference Call. Currently, all participants are in a listen-only mode. There will be a question-and-answer session at the end of this call. I would now like to turn the call over to the Mersana team. Please proceed..

Good afternoon. This is Eva Jack, Chief Business Officer at Mersana Therapeutics. Welcome to our first quarter 2018 conference call. We issued a press release after market close today reviewing our first quarter 2018 results and business updates, which will be covered on this call.

A replay of today's call will be available on the Investors and Media section of our website. After our prepared remarks, we will open the call for Q&A. This presentation contains forward-looking statements within the meaning of federal securities laws.

These are not statements of historical facts and are based on management’s beliefs and assumptions and on information currently available. They're subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially.

These risks are discussed in the company's SEC filings, including without limitation, the company’s annual report on Form 10-K filed on March 28, 2018. Except as required by law, the company assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future.

With that, I will turn the call over to Mersana’s Chief Executive Officer, Anna Protopapas..

Good afternoon everyone and thank you for joining us on our corporate update call for the first quarter of 2018. With me today are several members of our executive leadership team. In addition to Eva Jack, our Chief Business Officer, I'm joined by Tim Lowinger, our Chief Scientific Officer; and David Spellman, our Chief Financial Officer.

At Mersana, we're focused on building a leading ADC company by leveraging our proprietary and highly differentiated platform to develop important therapeutics for patients with high unmet medical need. 2018 is really poised to be another transformational year.

We're focused on advancing our two lead candidates through early clinical development while also continuing to innovate at the preclinical stage to expand our pipeline and our platforms. Let me now review our progress and our upcoming milestone, we last spoke about a month ago. Let me start with XMT-1522.

To remind you XMT-1522 is a Dolaflexin ADC targeting HER2-expressing tumors. It’s based on a proprietary HER2 antibody specifically optimized for uses in ADC with a distinct epitope to trastuzumab and pertuzumab and it carries a proprietary DolaLock payload and a drug to antibody ratio between 10 and 15.

XMT-1522 is in the dose escalation portion of the Phase I clinical trial. We continue to progress in our dose escalation study and the muscle tolerated dose has not yet been achieved. We will be presenting interim dose escalation data at the 2018 American Society of Clinical Oncology at the Annual Meeting in June.

We plan to continue to dose escalate until we reach maximum tolerated dose before establishing a Phase II dose and initiating enrollment of multiple expansion cohorts in breast, non-small cell lung cancer and gastric cancer. As we have discussed before, the expansion cohorts are designed to achieve clinical proof of concept.

Now on to our other drug candidate XMT-1536. To remind you XMT-1536 is a Dolaflexin ADC targeting NaPi2b. NaPi2b is a clinically validated ADC target broadly expressed in a Brazilian Australian cancer and non-squamous non-small cell lung cancer as well as in the same for all other rare tumor types.

XMT-1536 is based on a normal antibody carries a proprietary DolaLock payload and has a drug to antibody ratio of between 10 to 15. XMT-1536 is also in an ongoing Phase I dose escalation study. We are progressing this molecule more quickly through dose escalation based on our experience from XMT-1522.

Specifically, we had a higher starting dose adopted an accelerated titration design and a more rapid dosing escalation scheme. As a result XMT-1536 early doses escalation has moved substantially faster. As the clinical data matures, we will be presenting an update on XMT-1536 at the future medical meeting.

Similar to the 1522 design, once we reach a maximum tolerated dose, the XMT-1536 trial also rolls into expansion cohorts, which include ovarian cancer, nonsquamous non-small cell lung cancer and other more rare NaPi2b expressing tumors.

Because NaPi2b is expressed in over 80% of the tumors we are targeting, we are not prescreening for NaPi2b expression levels in the Phase I trial, rather we will be retroactively testing the tumors against our proprietary and validated NaPi2b diagnostic assay.

With that I would like to turn the call over to Tim, our Chief Scientific Officer, to discuss our preclinical and platform updates..

Hi, everyone, and thanks for joining us today. In April, we presented new data on two topics at the AACR Annual Meeting. First, Mersana scientists further characterize our proprietary DolaLock technology, which provides a unique controlled bystander effect.

Details including the demonstration that the initial bystander capable payload AF-HPA is converted the metabolic step within cancer cells to the highly potent the cell and permeable payload AS.

In addition, we reported that AF is not only prevented from the passive diffusion out of cancer cells, but it also is not a substrate for the drug efflux pump P-gp. Taken together we believe that the DolaLock design contributes to improving both efficacy and tolerability by locking the payload in the tumor.

Also at AACR, we presented a poster we co-authored with our partner to Takeda, the study characterized the ability of both XMT-1522 and its free payload to induce immunogenic cell death.

In [indiscernible] mouse model developed to express HER2, it was demonstrated that XMT-1522 to a superior efficacy relative to Kadcyla when each was combined with a checkpoint inhibitor.

In addition, dosing XMT-1522 in sequence before the checkpoint inhibitor lead to a more pronounced effect consistent with its ability to cause immunogenic cell death. As a demonstration of our continued ability to innovate and build a leading ADC company, we are also continuing to strengthen our intellectual property position.

As we have shared previously, we currently have 14 U.S. issued patents and 27 foreign issued patents. Recently, we were awarded a new U.S. patent entitled Protein-Polymer-Drug Conjugates, which provides Mersana broad coverage for Dolaflexin platform and its proprietary auristatin payload.

We're also continuing our discovery research focused on new molecules and new platforms and we look forward to unveiling these efforts at scientific meetings in the second half of 2018.

As we continue to establish ourselves as leaders in the ADC field, we remain focused on applying our efforts to innovate and to provide therapeutic options to patients that previously had none. And with that I'd like to turn the call over to Dave Spellman, our Chief Financial Officer, for an overview of our first quarter 2018 financial results..

Thank you, Tim. I will now review our first quarter 2018 financial results starting with our cash position. Cash, cash equivalent and marketable securities as of March 31, 2018 were $108 million compared with $88.5 million as of March 31, 2017. We expect that this financial position will fund our operating plan into the second half of 2019.

Now in to the financial results. The company has adopted new revenue recognition guidance known as ASC Topic 606 as of January 1st. This adoption has resulted in an increase of $2,031,000 in deferred revenue and accumulated deficit. We'll be providing more details on this in our 10-Q upon filing. Now into revenue.

Collaborative revenue for the first quarter 2018 was approximately $3.1 million compared to $4.3 million for the same period in 2017. Research and development expenses for the first quarter of 2018 were approximately $12.3 million compared to $10.1 million for the same period in 2017.

General and administrative expenses for the first quarter 2018 were approximately $3.6 million compared to $2.3 million for the same period in 2017. Net loss for the first quarter 2018 was $12.4 million, which equals $0.54 per share compared to a net loss of $8.1 million or $6.02 per share for the same period in 2017.

Weighted average common shares outstanding for the quarter ended March 31, 2018 were 22,816,521. The shares outstanding for the quarter ended March 31, 2017 were 1,388,475. I will now hand the call back over to our CEO, Anna Protopapas..

Thank you, Dave. I will wrap up the call with a summary of our goals for the rest of the year. We are on track to continue executing on all our goals for 2018. On XMT-1522, we will be disclosing data in June at the ASCO meeting. We’ll continue to dose escalate until we reach maximum tolerated dose and we will move into the expansion cohorts.

As the data matures, we will provide further update on future scientific meetings. On XMT-1536, we will continue our dose escalation. As I mentioned, we have moved quickly through the early doses and we plan once we reach maximum tolerated dose to select the Phase II dose and move into the expansion cohorts.

And again as the data matures, we plan to find opportunities to share data at the scientific meeting. As I mentioned previously, we're also extremely positive on the progress we've made in our preclinical and platform development work. We tend to select our next ADC clinical candidate and disclose data at the scientific meeting in 2018.

We also plan to disclose new proprietary platform technology at the scientific meeting in 2018. Thank you all for joining us today and thank you for your continued support of Mersana. We will now open the call to Q&A..

Thank you. [Operator Instructions] And our first question will come from the line of Michael Ulz with Robert W. Baird. Your line is now open..

Hey, guys. Thanks for taking the question. Just with respect to the 1536, you mentioned faster dose escalation strategy there.

Just wondering if we might be able to see initial safety data by year end and is the trigger there hitting a MTD or not necessarily?.

So, Mike, thank you for your support and thank you for initiating coverage on Mersana. At this point, we’re in a position to commit exactly when we will have mature enough data to share, but we do hope to get to a dataset that we could share by the end of the year or early next year.

We just don't have enough data at this point to be able to commit to an exact timetable..

Okay, got it. Thanks..

Thank you. And our next question will come from the line of Jonathan Chang with Leerink Partners. Your line is now open..

Thanks for taking my questions.

First, can you talk about how you see XMT-1536 positioned within the evolving ovarian cancer landscape?.

That's a good question. And in fact we are getting significantly more data [indiscernible] with investigators next week, but as you know we’re beginning by studying the drug in platinum resistant patients. These patients have really exhausted all other options and really there's a very big unmet medical need there. And that's where we're starting.

There's a cause we believe to move the product earlier in the disease, but I don’t think we’re fully articulated that at this point, but we’re working on fully developing that longer term plan to get it there and to get it to patients, who really need this drug..

Great and maybe just one more if I can. Can you just help to set investor expectations ahead of the 1522 ASCO presentation? Thank you..

Thanks for the question. As I’ve said on the call, we have not yet reached maximum tolerated dose. So what you will see is interim dose escalation data maybe around 25 patients that have been dosed with the drug up to now..

Thank you. And our next question will come from the line of Boris Peaker with Cowen. Your line is now open..

Great. Thanks for taking my question.

I just want to know as you're increasing the dosing of 1522, can you monitor how the overall dosing correlates to the amount of actual payload delivered to the tumor and do you anticipate this to be a linear relationship or is this kind of saturation kinetics there?.

Tim, do you want to….

Sure. Hi, Boris. I am Tim speaking. I think if I understood your question correctly you're saying as we increase dosing as we’re escalating with 1522 if we’re correlating with how much is getting to tumor..

Okay..

So we do not do biopsies or have any way to measure actual tumor concentration directly. To your point you know from the literature from Dane Wittrup and others, they've shown that as you increase, there can be a non-linear increase in the amount of drug that gets the tumor based on our concentration gradient.

So we do believe that as you increase dose, you have the potential to increase the amount of drug that is getting to the tumor, but that's not something that we can directly measure in the clinic..

Great. Thank you for taking my questions..

Thank you. [Operator Instructions] And our next question will come from the line of David Nierengarten with Wedbush. Your line is now open..

Hi, this is Dilip Joseph sitting in for David. Just wondering if you could clarify what dose cohort you are currently in the 1522 study and if it would make sense to implement maybe some of the design elements you’re using at 1536 to reach MTD a little bit faster..

Sorry, I didn’t understand the second part of your question, Dilip. One was about….

Is it possible to maybe be a little bit more aggressive in reaching MTD?.

Yeah. So I don't sort of comment on the cohort wherein the data will be there in a few weeks and you'll see that. Hopefully, we'll see you at ASCO and we will walk you through the data at the poster, but we have incorporated the learning from 1522 into the 1536 development.

Admittedly 1522 was the first time we were taking the Dolaflexin platform into the clinic and we have been cautious – maybe too cautious but definitely cautious in our – and deliberate in our dose escalation with 1536 we've been able to take those learnings and as I mentioned we started on the higher dose.

We use accelerated titration and we also use the more rapid dose escalation. So we are benefiting from the learnings of 1522 to accelerate 1536..

Thanks..

Thank you. And our next question will come from the line of Debjit Chattopadhyay with H.C. Wainwright. Your line is now open..

Hey, good afternoon.

Can you hear me?.

Yes, we can..

Hey, great. Thank you. So assuming you hit activity levels with the NaPi2b asset you know [indiscernible] let you the levels of that Roche had demonstrated.

Is the strategy there to develop a drug diagnostic combo and when do you start thinking about that?.

So we have done extensive work to develop an assay that assay has been transferred to a vendor and validate it. We are using it in the Phase I study, but at the same time we are engaging with diagnostic development companies and starting early development of the diagnostic.

So as we move into later stage studies, scheme is appropriate we will be ready to develop it along side of the drug..

Great and just one more follow up. So if you exit 2018 of it, the MTD established for the both of your lead programs, when do you envision checkpoint combo program? Is that feasible in 2019? And if so is that a BD effort or more of a clinical collaboration with no real monetary expectation? Thank you so much..

So, we do think we would like to pursue combination studies where they make sense and a checkpoint could be one of them. I think we would – our thinking is said we would establish until – at least some early single agent activity in the patient group of interest before we initiated the combination..

Thank you and good luck..

Thanks..

Thank you and I'm showing no further questions at this time. So now, I’d like to hand the conference back over to Ms. Anna Protopapas, Chief Executive Officer, for some closing comments or remarks.

Ma'am?.

So, I'd like to thank all of you for joining us on the call. I know it's only been four weeks. It's our last call and I look forward to seeing you at our poster at ASCO..

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program and we may all disconnect. Everybody have a wonderful day..