Mersana Therapeutics Inc (MRSN) 2018 Q2 法說會逐字稿

Good morning, and welcome to the Mersana Therapeutics Second Quarter 2018 Financial Results Conference Call. (Operator Instructions) I would now like to turn the call over to the Mersana team. Please proceed.

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

A replay of today's call will be available on the Investors & 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 law. These are not statements of historical facts and are based on management's beliefs and assumptions and on 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 risk that our clinical trials will not be completed on schedule, if at all, and the risk that our early encouraging preclinical results for XMT-1522 and XMT-1536 are not necessarily predictive of the results of our ongoing or future discovery programs or clinical studies. 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, 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.

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

Thank you, Eva, and good morning, everyone. Welcome to our corporate update call for the second quarter of 2018. With me today are several members of the Mersana team. In addition to Eva Jack, I'm joined by Tom -- Tim Lowinger, our Chief Scientific Officer; and Dave Spellman, our Chief Financial Officer.

I will begin with a discussion of XMT-1522, a Dolaflexin ADC targeting HER2-expressing tumors being studied in patients with HER2-expressing breast cancer, non-small cell lung cancer and gastric cancer. As you know, on July 19, we announced that the FDA placed the Phase I study on partial clinical hold. While the hold is in effect, current study participants in ongoing dose levels have continued to receive the drug and otherwise participate in the trial consistent with the protocol, although no new patients have been or will be enrolled pending resolution of the partial clinical hold. We have worked closely with investigators and a panel of experts to review the event in detail and explore risk mitigation strategies. We have submitted our response to the FDA.

I'd like to take a moment to thank the Mersana team, both the employees of Mersana and our partners, who have worked hard to enable us to submit an extremely thorough response to the FDA, providing analysis of the event and a proposal for proceeding with the trial when and if the hold is lifted.

Based on our communications with the FDA to date, we believe we are aligned with proposed changes to the protocol and are optimistic about being able to lift the clinical hold and resume the trial. Resolving this partial clinical hold remains our top priority, and we will provide a further update when the partial clinical hold is lifted and we're able to resume enrolling new patients.

Although the serious adverse event at dose level 7 in our partial clinical hold is the most recent information on XMT-1522, in the second quarter we presented clinical data on XMT-1522 at the 2018 ASCO Annual Meeting in June. Our data indicated that as of April 21, 2018, 22 patients had completed the dose-limiting toxicity, or DLT, evaluation period across 6 dose levels, from 2 to 21.3 milligrams per meter squared. This included 18 breast cancer, 3 gastric cancer, 1 HER2-amplified gallbladder cancer patient. As of that date, the treatment of those patients was well tolerated with most adverse events being low grade and manageable. The most common treatment-related AEs for those patients were fatigue, nausea, vomiting, anemia and transient elevations of AST and ALT.

As of the date of the ASCO disclosure, 6 patients had been dosed at dose level 7, that's 28.3 milligrams per meter squared, but only 3 had completed the first evaluation period. Of the 13 patients enrolled at doses 16 milligrams per meter squared or greater at that time, including the 3 from dose level 7, 11 had stable disease or better, including 1 confirmed partial response. We remain committed to 1522 and to resolve the partial clinical hold and continue the development of the program.

Now on XMT-1536, which, as you know, is a first-in-class Dolaflexin ADC targeting NaPi2b, which is broadly expressed in epithelial ovarian cancer and non-squamous non-small cell lung cancer, as well as several other more rare tumor types. XMT-1536 entered the clinic in December 2017 and has progressed rapidly through dose escalation. It is currently dosing at dose levels similar to those of XMT-1522.

We are evaluating the totality of the data and are considering certain protocol amendments to gain additional patient experience at alternative doses and dosing regimens. We believe, based on this evaluation as well as our data gathered to date, that we will be in a position to present data on the program in the first half of 2019 following completion of the dose escalation phase. We are again encouraged by the profile of 1536 and look forward to potentially helping more patients in this area of high unmet need.

At Mersana, we're committed on leveraging our leadership position in ADCs to bring important cancer therapies to patients. Beyond XMT-1522 and 1536, we're continuing to make progress on our discovery pipeline and continue to innovate on new platforms that will allow us to address additional patient needs.

I would like -- I would now like to turn the call over to Tim, our Chief Scientific Officer, to discuss the exciting work we're doing and outline our disclosure plan.

Hi, everyone, thank you for joining us this morning.

In parallel with our work on XMT-1522 and XMT-1536, we've had a very comprehensive research strategy focused on selecting new targets to develop additional Dolaflexin ADCs as well as evaluating new platforms that would extend the application of our ADCs to additional unmet patient needs.

To date, we have disclosed little information on our research activities. However, now that the data has matured, we have submitted abstracts and, if accepted, we will be disclosing data on these new problems at the EORTC-NCI-AACR, or so-called triple conference, on a number of key research initiatives.

First, we will be describing a next-generation ADC platform that we've developed, which is fully synthetic as well as completely homogeneous and which provides the ability for precise selection and control of the drug-to-antibody ratio from a DAR of 2 to a DAR of 24. We have demonstrated that for different targets, the optimal DAR that corresponds to the maximal therapeutic index for the target can vary. This platform is expected to provide us the ability to evaluate a range of DARs efficiently and to identify the best variant to advance for a given target.

Secondly, we also plan to reveal data on a novel DNA damaging payload platform that we believe, based on benchmarking against competitor ADC DNA damaging agent platforms, has the potential to provide a significant improvement in both efficacy and tolerability and to extend the potential benefit of our ADCs to additional tumor types in patient populations with high unmet medical need. Overall, we're very excited about the progress we have made and continue to make in our research efforts, and we look forward to disclosing more details of these new innovations in the fourth quarter of this year.

And with that, I will turn the call over to Dave Spellman, Mersana's Chief Financial Officer, for an overview of our second quarter 2018 financial results.

Thanks, Tim. I'll now recap our second quarter 2018 financial results.

We remain well capitalized with a strong cash position. Our cash, cash equivalents and marketable securities as of June 30, 2018, were approximately $97 million compared to $108 million as of March 31. We expect this financial position will fund our operating plan through key milestones for at least the next 12 months.

Some of our key highlights for the second quarter include the following. Collaboration revenue for the second quarter of 2018 was approximately $4.2 million compared to $3.7 million for the second -- same period in 2017 primarily due to a $1.5 million milestone achieved in the second quarter. Research and development expenses for the second quarter of 2018 were approximately $12.6 million compared to $10.6 million for the same period in 2017, driven primarily by an increase in staff and employee-related costs as well as clinical and in regulatory expenses driven by supporting 2 clinical-stage programs.

G&A expenses for the second quarter of 2018 were approximately $4.2 million compared to $2.2 million for the same period in 2017, driven primarily by increased headcount and employee-related expenses as well as increased consulting and professional fees. Net loss for the second quarter of 2018 was $12.4 million or $0.54 per share compared to a net loss of $8.9 million or $6.33 a share for the same period in 2017. Weighted average common shares outstanding were 22,966,314 for the quarter ended June 30, 2018, and 1,412,308 for the quarter ended June 30, 2017.

And with that, I'll now return the call to Anna for some concluding remarks.

Thank you all for joining us today.

At this time, we're fully committed to resolving the partial clinical hold on XMT-1522 and advancing our Phase I clinical trial on 1536. We remain confident that our novel technology and therapeutic candidates can provide a real benefit for patients that have exhausted other treatment options. And we look forward to providing additional updates in the next -- in the near future.

Thank you for your continued support of Mersana. We'll now open the call to Q&A.

(Operator Instructions) Your first question comes from Jonathan Chang with Leerink Partners.

Can you -- first question, can you provide more color on the protocol amendments for 1536 and alternative dosing regimens, if I heard you correctly?

Yes, I -- as I said, we are considering this now and are in the process of finalizing implementation. So what I can say is as you appreciate Phase I dose escalation, the objective is always to optimize the profile of the drug and really find the right balance between efficacy and tolerability. And we've looked at recent PK data, and it looks like there's justification for alternative dosing schedules, particularly a 4-week regimen, Jonathan. So we are finalizing that analysis, as well as looking at other regimens that might be justified by the data. So that's where we are. We're sharing our thinking at this point as we finalize the analysis and move forward to implementation.

Great. And just as a follow-up, I guess you also mentioned the advances you're making with your preclinical platform and additional potential candidates, and you've guided to an update in the fourth quarter. Can you talk about how you're thinking about business development opportunities moving forward?

Sure, Jonathan. This is Eva. We are always evaluating different potential partnerships with our various platforms, Dolaflexin as well as the new platforms, and are looking for those that really bring high strategic value to us. So we have things under consideration at this point.

Your next question comes from Jessica Fye with JPMorgan.

I was hoping you could elaborate on the circumstances of the event that triggered the partial clinical hold for 1522 now that your report is complete and has been submitted to the FDA.

Jess, I know we've had this discussion with you and many others at the time. I think it's our preference to resolve the partial clinical hold, complete our dialogue with the FDA. And then at that time would be the appropriate time to share information. I think we have a good handle on it. I feel reasonably -- I feel confident we have a good path forward. But I would much prefer to really share all the details at the time we resolve this with the FDA, and I appreciate your patience.

Okay, understood. Maybe as a follow-up, can you provide a time line for when you expect the FDA to respond? Or if not that, can you provide us with the specific timing on when your report was submitted to the FDA?

So I can tell you that it was submitted yesterday, so -- and we have received the formal receipt from the FDA. And based on the statutory requirements, the FDA has up to 30 days to respond. That they could respond earlier is completely up to them. The response could be complete agreement. The response could be that they come back with more questions. But that is -- they have a -- there is a requirement that the FDA responds within 30 days.

Your next question comes from Debjit Chattopadhyay with H.C. Wainwright.

So could you just clarify your comments on 1536 once again? I mean, are you just exploring alternative dosing schedule? And do you plan to proceed with the escalation, dose escalation, or you're not looking to escalate any further than where you are and just evaluating different time schedules?

We are looking at evaluating different schedules and then escalating -- potentially escalating from there if the data is consistent with our expectations.

And the follow up on the 1522. While you expect this to be resolved, do you think you can proceed with cohort 8 or higher doses? Or you are kind of somewhere in this -- between dose cohorts 6 and 7? And if you are between 6 and 7 going forward, do you think the program remains competitive given the landscape?

I think -- as I mentioned to Jess, I think I would prefer to have this resolved with the FDA and then give you the full picture of both the incident as well as the path forward. So I appreciate the patience.

(Operator Instructions) Your next question comes from Boris Peaker with Cowen.

So I just want to follow up on 1522. And specifically, the event triggering the clinical hold was a dose level 7. And I'm just curious, what dose level do you think you need to get to, to maximize the efficacy of 1522, particularly to make it competitive with Daiichi's antibody?

I don't know if -- I mean, I don't know if we have the exact -- if one can predict exactly. We are definitely -- as you've seen from the data we've shared at ASCO, that we're very much in a range that is therapeutically relevant, where patients have responded. And it's all about optimizing that response and optimizing that response in the context of an acceptable side effect profile. So Boris, I don't know if I have a number for you of a dose, but I do think we're very close to the -- to a range that is therapeutically relevant.

Great. And just to follow up, you've mentioned further expanding your pipeline into DNA damaging ADCs. I'm just curious, given the data we've seen for Stemcentrx and Seattle Genetics discontinuing their program with PBD dimers, what do you see in this payload approach that maybe others have not seen or haven't been particularly successful with?

Boris, this is Tim. Of course, we are aware of the clinical experience that Seattle and others have had with that class, and that's why we've taken that into account in how we've designed our particular DNA damaging agent with a special emphasis on improving both efficacy and tolerability. We look forward to sharing those details in context and benchmarking that we've done versus those other platforms at the meeting in the fourth quarter.

And I'm showing no further questions at this time. I'd like to turn the call back over to Anna Protopapas for closing remarks.

Thank you for joining us today. In sum, the team has -- is hard at work to resolve the partial clinical hold on XMT-1522. We look forward to providing you with an update on our communication with the FDA and the progress of the rest of our pipeline.

So thank you very much for joining us this morning.

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