Good morning and welcome to Mersana Therapeutics’ Fourth Quarter and Full Year 2018 Conference Call. Currently, all participants are in 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 Sarah Carmody, Director, Investor Relations and Corporate Communications. Please proceed..

Good morning. Welcome to Mersana’s fourth quarter and full year 2018 conference call. We issued a press release earlier this morning reviewing our fourth quarter and full year 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. Before we begin, I’d like to mention that our call will contain 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 the information currently available.

They are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially, including the risks that our early encouraging pre-clinical results for XMT-1536 are not necessarily predictive of the results of our ongoing or future discovery programs or clinical studies.

That the development and identification of the company’s product candidate and new platforms will take longer and and/or cost more than planned and that our clinical trials will not be completed on schedule, if at all.

These risks are discussed in the company’s SEC filings including without limitations the company’s Annual Report on Form 10-K filed on March 28, 2018, and company’s Quarterly Report on Form 10-Q filed with the SEC on November 13, 2018, and subsequent filings.

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. And with that, I’ll turn the call over to Anna Protopapas, Mersana’s Chief Executive Officer..

Thank you, Sarah. Good morning everyone and welcome to our financial and corporate update call for the fourth quarter and year-ended 2018. With me today are several members of our executive leadership team.

I’m joined by Tim Lowinger, our Chief Scientific Officer; Dave Spellman, our Chief Financial Officer; Eva Jack, our Chief Business Officer; and the newest member of our executive team, Dirk Huebner, our Chief Medical Officer.

Dirk joined us in late November and brings with him 25 years of oncology drug development experience including significant experience in the development and approval of ADCs. During Dirk’s seven year tenure at Takeda, Dirk led the European approval of ADCETRIS and the design and execution of label expansions studies for the drug.

Dirk’s expertise will be instrumental as we prepared for the next step in the development of XMT 1536 and advance to our future ADC candidates. We are very excited to have Dirk on the team. I’ll turn to the business update; we started the year with a focused strategy and are in a strong position for growth in 2019 and beyond.

Our confidence in our path forward is based on a number of factors; first, the early emerging profile for 1536, our wholly-owned, first-in-class Dolaflexin ADC targeting NaPi2b is very encouraging. The program is poised for important data readouts in the 12 to 18 months with the first one being dose escalation data in the second quarter of this year.

Secondly, we continue to leverage our expertise in ADC development in our proprietary and highly differentiated platforms to expand our pipeline and address an even broader range of unmet medical needs. We remain on track to disclose our next ADC candidate in the second half of this year, targeting the first half 2020 for an IND.

Thirdly, we recently strengthened our balance sheet to a successful public equity offering that provided us with over 97 million in gross proceeds, which we expect will extend our cash rate significantly and will support progression of pipeline through important clinical milestones.

With a promising asset in the clinic, our next ADC targeted to move in to the clinic in the first half of 2020, a strong balance sheet and an experience (inaudible) we believe we have the components for a successful year ahead of us.

Before I pass on the call to Dirk and Tim for specific data updates, I would like to highlight the important aspects of XMT 1536 that make it a particularly exciting opportunity.

XMT 1536 is a first-in-class ADC to a clinically validated target which has demonstrated it clinically that we have a highly differentiated molecule with a potential for enhanced efficacy and tolerability. Tim will cover the pre-clinical work that we believe supports our differentiation in a few moments.

The program continues to move rapidly and we are encouraged by the emerging data as we’re seeing clinically meaningful efficacy at well tolerated doses. And again Dirk will provide more details on the study.

Third, the problem addresses significant unmet patient needs, with platinum-resistant ovarian cancer patients as well as non-small cell lung cancer adenocarcinoma patients that progressed on the front line therapy have poor prognosis and very limited treatment options.

Over the next few months, we will select a go-forward dose and initiate the expansion cohorts. Our objective is to optimize efficacy, tolerability and durational treatment while understanding the correlation between NaPi2b express and response.

With that as background, I’ll like to turn the call over to Dirk Huebner, our Chief Medical Officer to discuss the early 1536 study in more details. .

Thank you, Anna. As we disclosed previously, we have explored once every three week schedule in doses of actual 40 mg per square meter. We subsequently began evaluation of the once every four week regimen. We have completed the 20 and 30 mg per square meter dosing cohorts and recently initiated a 36 mg per square meter dose cohort.

To date, XMT 1536 has been well tolerated at all doses. We will continue to dose escalate at once every four week schedule with the objective of identifying the optimal dose for further clinical development. To remind you, we began observing clinically relevant activity at doses at 20 mg per square meter and above.

The dose escalation is reporting heavily pre-treated patients with broad set of tumors known to express NaPi2b including ovarian cancer, NSCLC, adenocarcinoma, endometrial, papillary renal, salivary duct, and papillary thyroid cancer.

Patients are not selected for NaPi2b expression, although the expression levels will be measures with respectively based on archival tissue. We are very encouraged by the early signs of efficacy and the tolerability profile we have seen to-date.

In selecting the goal for dose, we will seek a dose that provides an optimal balance of efficacy, tolerability and duration of treatment. Following the selection of the go-forward dose, we plan to initiate the expansion cohort portion of this study in ovarian cancer and NSCLC and adenocarcinoma.

We are in the process of finalizing the eligibility criteria and sample size for these expansion cohorts. Our objective for the expansion cohort is to characterize the efficacy, the safety profile of XMT 1536 as well as to determine the response relationship to NaPi2b expression.

These are critical elements that will prepare us well for potential patient selection strategies in subsequent pivotal studies. I will turn it over now to my colleague, Tim Lowinger, who is our Chief Scientific Officer to discuss the exciting discovery work that’s ongoing. .

Thanks Dirk. Our excitement about XMT 1536 is not only based on the emerging clinical data, but also from a robust set of pre-clinical data that we’ve accumulated to date to demonstrate differentiation of this agent. In head-to-head pre-clinical studies, XMT 1536 demonstrated superior efficacy to lifastuzumab vedotin across multiple experiments.

Comparison of the published non-human primate, HNSTD for lifastuzumab vedotin based on payload to the XMT 1536 data also supports improved tolerability. Furthermore the high DAR of XMT 1536 provides a more efficient delivery of the payload, including in tumors with lower levels of antigen expression.

In addition, we’ve demonstrated pre-clinically that the DolaLock payload which is not a PGP substrate remains locked in the tumor for weeks after a single dose, providing highly durable responses. Beyond XMT 1536, we are making significant progress on our discovery efforts and have some exciting disclosures in 2019.

We are continuing to Dolasynthen in the context of our prioritized target. If you recall, Dolasynthen utilizes our innovative DolaLock auristatin payload now incorporate in to a fully synthetic homogeneous scalpel that we have developed.

Dolasynthen retains the favorable properties of Dolaflexin including excellent physical, chemical and PK properties and also allows for a further optimization of the therapeutic index for a given antibody through the precise control of optimal DAR matched with a specific target as well as site specific bio-conjugation to provide completely homogenous ADCs.

We will be presenting a further pre-clinical data on our Dolasynthen platform at the upcoming AACR meeting on April 1 at 3:05 PM during the novel therapeutic agents and screening approaching session.

We will also be presenting upholstered AECR on Sunday, March 31, focused on our work on a dual payload ADC which contains both the microtubule inhibitor and the DNA alkylator. Dual payload ADCs can enable the efficient delivery of two payloads with different mechanisms of action at a precisely defined [geometry] directly to the tumor cell.

Lastly, we have also made great progress in advancing our next ADC clinical candidate. We plan to disclose the details of this next candidate in the second half of 2019 with the goal of submitting an IND and initiating a phase 1 study in the first half of 2020. We are very excited about the potential of this candidate, so please stay tuned.

And with that I will turn the call over to Dave Spellman, Mersana’s Chief Financial Officer. .

Thanks Tim, and now a recap of our fourth quarter and full year 2018 financial results. Some of our key highlights for the fourth quarter include the following; collaboration revenue for the fourth quarter of 2018 was approximately 1.2 million, compared to 3.3 million for the same period in 2017.

The decrease was largely a result of a decrease in efforts to support partner programs. Research and development expenses for the fourth quarter of 2018 was approximately 19.8 million compared to 14.6 million for the same period in 2017.

The increase was primarily due to the increase in clinical and regulatory expenses associated with the advancement of XMT 1536, a (inaudible) cost to support the program’s future clinical development. General and administrative expenses for the fourth quarter of 2018 were approximately 4.2 million compared to 3.1 million for the same period of 2017.

The increase is driven by an increase in headcount and professional fees. Net loss for the fourth quarter of 2018 was (inaudible) or $0.97 a share, compared to a net loss of 14 million or $0.61 a share for the same period in 2017.

Weighted average common shares outstanding for the years ended December 31, 2018 and December 31, 2017 were 23,184,450 and 22,780,425 respectively. I would also like to provide a bit more color on what to expect with the termination of XMT 1522 collaboration with Takeda.

In Q1 2019, we expect to accelerate the deferred revenue portion of the Takeda contract and fully recognize all collaboration revenue. There are some trailing costs still to come in Q1 as a result of winding down the 1522 program. Additionally, with the step-in of all program related activities, we expect our go-forward cost to run rate to increase.

We are well capitalized with a strong cash position. Our cash, cash equivalent and marketable securities as of December 31, 2018 were 70.1 million compared to 125.2 million as of December 31, 2017. Additionally, as you’re aware we closed the public equity offering on March 5.

We’ve provided us with gross proceeds of approximately 98 million, with the divisional capital, we expect to be able fund our operating plan through several pre-clinical milestones with cash in to at least mid-2021. I will now return the call to Anna for some concluding remarks. .

Thank you, Dave. I’ll wrap today’s call with a review of our key goals for 2019 and beyond. First, we look forward to an active year in the clinic as we move towards the dose escalation readout in our 1526 study, the selection of the go-forward dose and the initiation of the expansion cohort portion of the phase 1 study.

We also expect to announce our next clinical candidate in the second half of 2019, and target the filing of our next IND in the first half of 2020. Finally, we will continue to disclose pre-clinical and discovery data at scientific meeting throughout the year, as we drive forward our proprietary ADC technology platforms.

We believe we’re in a strong position to execute on these goals and remain confident that our novel technologies and clinical assets have the potential to provide a real benefit to cancer patients with extremely limited treatment options. Thank you for your continued support of Mersana. We are now opening the call to Q&A..

[Operator Instructions] our first question comes from Jonathan Chang of SVB Leerink. Your line is now open. .

First question, can you help net investor expectations ahead of the 1536 dose escalation data in the second quarter, in terms of how much more data we could see versus the initial data disclosure earlier this year and the type of data we could see?.

What you will see a continued dose escalation study. We’re looking at – as we mentioned, we’ve continued to dose escalate, completed the 30 mg move to the 36 mg which is currently recruiting patients, and we will continue to dose escalate based on data. Obviously data will drive us to where we go next.

For these patients we will have evaluation of the tolerability profile. We will look at the PK, we’re looking at evaluation of the NaPi2b expression, but this will be based on our [thyroid] tissue which has already requested for the dose escalation study, and obviously early signs of efficacy.

So that’s what the data package will look like when we disclose it in Q2. .

Got it, and just a follow-up. I’m guessing the bulk of your data in the second quarter update will likely be in (inaudible) research in ovarian cancer.

What do you see as a benchmark there, and are there any lessons from the recent (inaudible) 1 readout and under ADC development for platinum resistant ovarian cancer that could be applied to your own development efforts. .

As you know these patients have very poor prognosis. The standard of care for these patients is pegylated doxorubicin, the response for it is around 10%, the progression free survival is 3 to 3 and a half months, and that has been further validated acting through the data we saw recently on another ADC.

So, what we also looked at the publicly available data on the other ADC, and obviously it’s always disappointing when a study for a drug that has the potential to help patients that really don’t have many other options, when a study like that disappoints, it’s always disappointing.

When we looked at the topline data, whatever was disclosed, I think it reinforces our belief that understanding the correlation between expression of the antigen and response is really critical and it reinforces the work.

We won’t be doing in the expansion cohort to merely understand that, so we can be well prepared for patient selection in the later stage of the later trial.

The other thing I think that is important and its reinforced by even the topline data that was disclosed is that the response rate doesn’t always be directly correlate with PFS and what really matters is how long our patients on treatment, how long are they getting clinical benefit, whether that is a response or even staple disease or (inaudible) disease control and extended disease control is what is really going to drive an increase PFS that pretends to be an improved overall survival.

So as we look at designing an expansion cohorts we are looking at how can we better at this time, not only the correlation of expression with the target but also how do the selected dose the patient can stay on treatment for extended period of time and benefit from the drug. .

And our next question comes from Mike Ulz with Baird. Your line is now open. .

Just a follow-up on 1536 and in terms of the dose escalation, you’re currently at the 36 mg dose, and is the goal there to eventually hit MTD so you continue to higher if you don’t hit it at 36 mg.

And t hen can you remind us how high you dosed with 1522?.

So for 1522 we dosed to 37 mg per meter square before we moved away from the program, we had not yet reached MTD. I think your question regarding 1536, I think the right answer is, we’re going to let the data take us where the data takes us as we said.

We’re looking good tolerability, good durational response, balance with efficacy and as we disclosed we started seeing clinically meaningful efficacy at 20 mg per meter square. .

And our next question comes from Jessica Fye with JP Morgan. Your line is now open. .

Once you identify the recommended phase 2 dose for 1536, can you talk about whether the expansion cohorts would start simultaneously or in more of a stage manner? And to the extent they might be staggered, can you talk to which tumor type you would expect to start with first, and maybe also just talk about your expectation for potentially different enrollment rate depending on tumor type?.

That’s a good question Jessica, and I’ll start by saying that Dirk and this team is still in the middle of really finalizing what the expansion cohorts will be.

We haven’t given any formal guidance on the expansion cohorts, but I can tell you that our current thinking would be that we will simultaneously start to expansion cohorts, one in ovarian and one in non-small cell lung cancer.

The recruitment at the existing sites were in, we’ll be seamless because this will be a continuation of the existing protocol, but we will have to bring on forward additional sites, particularly in lung cancer because the sites we are at are primarily ovarian cancer site.

So we are in the mid of designing those expansion cohorts, doing the feasibility study, identifying the new sites. So I’m not in a position to give you exact guidance, but the sites we’re in, we’re going to roll from the expansion cohort in to a prominent doses collection in to the expansion cohort in a seamless way. .

And our next question comes from David Nierengarten with Wedbush Securities. Your line is open. .

I just had a science question, I was curious as you look at the Dolasynthen platform and dual ADCs, are there limits to what chemotherapy is for on [toxin] care I should say, you can use there just thinking about some of the challenges are the dosing samples for those (inaudible) same antibody.

Again scientifically curious if there are limits for the chemistry, limits to pairs that you’re looking at, just if you can elaborate on that?.

David, this is Tim. You grabbed a good point that as we look at dual payloads one has to consider the properties of each payload and also how they combine. But we’re excited about with the potential for dual payloads are there synergies that one can achieve.

And again if you think of the types of platforms that we have and our ability to range drug antibody ratio up to very high levels, things that we are thinking about are taking payloads that can have their own established therapeutic index by combining them in synergistic ratios such as every tumor is taking up those two drug in a synergistic ratio and really controlling the bio-distribution of those.

So it is an added complexity, but I think it offers lot of potential as we think about how do we further innovate in the ADC space. .

Maybe a specific follow-up on, is it possible or if you look at combinations that was upon other DNA balancing agents like a (inaudible) inhibitor or a derivative there or a DNA damaging agent like a platinum might not work, but something in that arena, and I’m curious on the limits of the science on that..

Sure. I think what it really gets to is, you’re starting to outline all the possibilities that there are, and some of those mechanisms that when combined could be very interesting synergies.

But this is work that’s ongoing and I don’t want to say really much more than that, other than we do think that there is a lot of potential here in an area for inhibition. .

[Operator Instructions] Our next question comes from Debjit Chattopadhyay with H.C. Wainwright. Your line is open. .

So the two [PIs] at the lower dose have those been now confirmed? And from an optimal dose perspective from your pre-clinical studies what is the max growth that you plan to get at to get the maximum target engagement and how does that line up with the discontinued Roche program?.

(inaudible) as we pointed out already at the JP Morgan conference, the [PIs] have been confirmed, so that’s how we can disclose the data and more data on that topic we want to disclose when we publicly discuss that at a scientific meeting in the second quarter of this year. .

So you also asked Debjit about how our dose compares, obviously these are different programs, different design of our ADCs. But 36 mg per meter square is about 1 mg per kg. You know that the Genentech molecule was dosing at 2.4 mg per kg.

If you take in to consideration that we have about 3 to 4 times the payload; so if you want at the high level to translate the 1 mg per kg to a payload dose, they triple at payload dose, we are currently above the payload dose that was dosed with [BCMA]. Obviously these are different ADCs, but at a high level.

We are already above the payload dose that was delivered by the [BCMA] program. .

That’s what I was trying to get at. And then one last question, obviously I guess the focus on non-small cell is going to be the relapse or may be the refractory cohort.

So could you guys point to any specific example by targeting a non-driver mutation has resulted in a clinically relevant outcome?.

With respect to the expansion cohort as you pointed out, we’re going to grow in to NSCLC, adenocarcinoma as well as ovarian cancer. However, the specifics in terms of inclusion criteria so this is work in progress, as we discuss that with our investigators and experts in the field.

We are working on a very reasonable patient population where our compound can be positioned well for market utilization as we move forward. .

And I’m not showing any further questions at this time. I would now like to turn the call back over to Anna Protopapas, CEO for any closing remarks. .

Thank you all for tuning in to our full year update. We’re making steady progress in the clinic and in our preclinical and development work and we look forward to sharing our progress with you over the course of the year. Have a great day. .

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone have a wonderful day..