Q2 2020 Mersana Therapeutics Inc Earnings Call

education of a companies product candidate

And new platforms will take longer and or cost more than plan and that our clinical trials will not be completed on schedule. If at all these risks are discussed in the SEC in the competition SEC filings, including without limitation company's annual report on form 10-K filed on February 28th, 2020. The company's quarterly report on form 10-q for the quarterly. Ended March Thirty One twenty and subsequent filing.

In addition covid-19 companies preclinical and clinical development after business operations and financial results off the impact on the company's operations and the value of and market for the company stock will depend on future developments that are highly uncertain cannot be predicted with confidence at this time, the ultimate duration of the pandemic quarantine physical distancing and business closure requirements in the US and in other countries, and the effectiveness of actions taken globally contain and treat the disease except as required by law the company assumes no obligation to update these forward-looking statements publicly even a new information becomes available in the future. And with that. I'll turn the call over to Coruscant as president and chief executive officer.

Thank you, Sarah. Good morning, everyone and Welcome to our corporate and financial update call for the second quarter of 2020 joining me today with prepared to offer a senior VP of finance a product strategy the rest of the executive team will be available for your question.

It has been forwarded first half of the Year former Sana despite the challenges of operation in the covid-19 environment are to deliver the car off data on exit key 1556 Advanced pipeline can be including moving excellent in 1592 into clinical development and execution important financing which have well-positioned. My son. I'm very proud of the entire McDonald's because of their commitment and perseverance. We had multiple important critical milestones and make significant progress against our 2020 pipeline goals as we work towards achieving our vision of Life basically advancing to the product list of patients.

Let me summarize those Milestones first establish the maximum tolerated dose of 43 milligrams per liter squared off demonstrated that that did so the agent is called active and well tolerated in both of area and lung adenocarcinoma pooches without the severe neutropenia. You're welcome and toxicity observed with other platforms. We presented the dose-escalation at the webcast on March 31st in Life or oil presentation at the Society of psychological oncology conference, which was canceled due to covid-19.

I could.

Demonstrate that proof-of-concept for exiting 5036 in heavily pretreated ovarian cancer patient with a response rate of 35% including a pack complete response rate as a reminder in platinum-resistant ovarian cancer patients. The standard of care is single-agent chemotherapy with a response rate down to 12% Do you say that we presented axle editor associated with test with the key investigator on May 27th. Third, we have several months with Exit 36 in love with one and multiple prolong stapled it heavily pre-treated page, but Joseph expansion study.

1592 with no directive of rapidly escalated to reach the maximum color is dead. So I took critically evaluate the differentiation from extension 5036 the preclinical data supported the potential of a computer estimated to walk was presented at the virtual conference or June 22nd.

We have put plugs. Are you the 6:00 and put that the preclinical data at the virtual card for a 20-second these days off several streets of across multiple targets and preclinical models give you a simple deliberate robot targeted at home as well as well tolerated doses Cuba specifically normally, but other Home box will be used activation.

Did you say that also show that the academic has over a hundred fold increase potency as well as significantly lower induction service title kite with compared to twenty this yet uncomplicated actually supporting the potential for a significant improvements that are involved.

We have all sorts of the first class is 718 in to be able to generate exciting data supposed the potential of the month to have a positive impact for patients with high lead last year. We executed access to the. Production is April at a public file a dispute. But after the combine two hundred and forty million in Gross closes, like hitting that balance sheet with a first-in-class candidate that cheating proof-of-concept. Texas and proof of activity landed in a place to go buy a second key with a potential for compelling differentiation two additional pipeline programs at home. Probably selection differentiate a platform a strong cash positions had experienced team is good position to provide light.

Cancel patiently beat.

Let me down upcoming Milestones to the second half of the year.

Connected with Xfinity 5036 is to continue to enroll in the ovarian cancer expansion portion of the study over the course of 2020. We had originally planned to recruit about 40 to 45 patients in the extension cord. But because of investigator enthusiasm for fifteen thirty-six, we expect to exceed this song by end of the year when the people responses achieved with XLT 1536 in patients with few options some having sold platinum as well. I think about the coffee cupidos. We're actively working of deposit deposit to registration. Our goal is to meet with the end of 2028 to take that feedback. We believe they start high and mid medical lead discussions with low miles and Regulatory experts as well as based on precedent that there is a dead

Celery to the Google Plus in Park Plaza with the Civil various taxes in addition to our preparations for the FDA discussion and the registration. We are also developing a long-term development plan and lifecycle management plan for accepting 5036 from an operational standpoint fabric the number of sites in the US as well as in Europe, Canada and Australia, we plan to provide a comprehensive update on X 1536 and ovarian wage allows the end of the year give it a significantly large number of pages and longer follow-up expected. Yes selection regarding the distinction pass the longer term life cycle management class. We will provide more details regarding the exact value of this update at a later time.

Transfer our next data update Aya pleased to report that has been accepted as a poster at upcoming 2013 virtual Congress in September. They keep posted is scheduled for September 17th 2020 and we plan to host the light conference call and webcast to discuss data featuring investigator doctor Hamilton director breast cancer and gynecological cancer research program Club, Sarah. Probably six Institute of Technology on September 17th at 8 a.m.

The poster will be focused on a very intensive place. It's only knows that the date of cuddle for the Oscar presentation was made first the date of birth will be the early August. Remember that the first was this assessment is after two cycles or eight weeks as a result is disclosure will be able to update of the study with additional follow-up or the patient presented at us. Go ahead with this assessment of the small number of educational patients who are not valuable at the time of the cattle or enter the credit in May, although this is incremental data. The goal of this disclosure is to increase on a 36 above European investigated and position as I mentioned the disclosure. We plan to provide a lower rear end.

I'll begin with X 1536 again.

biteable comprehensive data

As well as the opportunity to discuss the past forward for Exit 36.

We also continue to add data. However because it's related to this is it said the lung Focus International sites too because his life is willing to avoid intense competition for lung cancer patients or recruitment rates have been difficult to predict and at this point we believe there will be challenging to achieving a previously stated goal of a solid 40 to 45 patients. He'd be expected profit by the for the positive note. We have to get to see if he's legal restrictions related to copy back to the outside the US which should allow us to initiate International sites in the coming weeks and months and accelerate the song long pieces through the rest of the year.

Needed to be a strategic leader will be begged have people activate. He filled a top. She approached him and under his leadership. There was relatively to spell upon normally platform 5036 except 315 92 and our robust pipeline of earliest stage development have received a call by calling. Thank you for your commitment and many contributions over the years as well as your continued leadership. As we enter this important next stage understand has divorce but focus of that can be done acid into pivotal study. And with that I will turn the call over to Brian to Shiner for an overview of a financial results.

Thank you, Anna. Good morning, everyone and thank you for joining us before I start I'd like to also congratulate Michael very well deserved. I'd also like to thank Eva for her many contributions over the years as well as her invaluable partnership me and my time here at now reduced some of the key financial highlights from our second quarter 2020 results. I'll start with cash cuz we ended the second quarter of 2020 for the approximately 291.4 million dollars in cash cash equivalents and marketable securities compared to Iraq simply 100 billion dollars at the end of 2019 used in operating activities in the second quarter, which is 15.9 million dollars.

In April, we raised gross proceeds of approximately $65 million who are aftermarket facility or ATM through the sale and approximately 10.9 million shares an average price of approximately $6 the transaction use the majority of our ATM ability and we subsequently established a new example of one hundred million the housekeeping that your topic actually as a reminder in June be raised gross proceeds approximately a hundred billion dollars through a public offering of them are offering price of $19 which included the exercise in full of the underwriters option to purchase additional shares of common stock.

In addition to our current estimate. We have the option to draw additional cost of up to $15 through the existing debt financing agreement with Silicon Valley back off today. We are providing updated cash Runway guidance following the public stock offering we expect that our current Cash Cash equivalents of marketable Securities, including the proceeds from the public stock offering a one able to fund our current operating plan commitment for more than two years.

And now some of the key highlights from our second quarter 2020 collaboration in the second quarter of 2020 was approximately 0.8 million month compared to zero point two billion dollar for the same. In 2019. The increase in collaboration Revenue was primarily or result the completion of research activities associated with the targeting a birthday g a

Operator: BF-WATCH TV 2021 BF-WATCH TV 2021

Research and development expenses for the second quarter of 2024 approximately 15.4 million compared to thirteen point eight billion dollars for the same. In 2019. I was primarily due to an increase in activity 1536 and actually be $15 plus local and Regulatory a milestone payment related to the wrong extension 1536 Bank Street in the advancement of companion Diagnostics development efforts for the next to be by alarm. All of these were offset by a decrease in preclinical development manufacturing expenses for $50.92 and clinical and Regulatory expenses for accents fifteen point.

Unnamed Speaker: The Bulletproof Executive 2013 Good morning, and welcome to Mersana Therapeutics' second quarter. Currently, all participants are in a... There will be a question and answer session at the end of the day. Thank you.

Executive Director, Investor Relations: I would now like to turn the call over to you. Executive Director, Investor Relations, Good morning. Welcome to Mersana's second quarter 2020 conference. We issued a press release earlier this morning reviewing our second quarter 2020 financial 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.

Executive Director, Investor Relations: 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 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 preclinical results for XMT-1536 and XMT-1592 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 candidates and new platforms will take longer and or cost more than planned, and that our clinical trials will not be completed on schedule, if at all.

General and

Straight of expensive for a second quarter of 2020 or approximately 55.2 million dollars compared to four point two million dollars in the same. In 2019. The increase is primarily attributable to an increase in the valuation of stock based Awards granted to employees resulting in higher non-cash. Compensation net loss for the second quarter of 2020 with 19.8 million dollars or $0.33 per share compared to a net loss of 17 121 million dollars or 36 cents per share for the same. 29 weighted average common shares outstanding for the quarters ending June 30th, 2020 and June 30th 2019 were approximately 61 billion and 48 million respectively. We have 68.4 million, chairs of standing.

Executive Director, Investor Relations: These risks are discussed in the SEC's filings, including, without limitation, the company's annual report on Form 10-K filed on February 28, 2020, the company's quarterly report on Form 10-Q for the quarterly period ended March 31, 2020, and subsequent filings. In addition, while we expect that the COVID-19 pandemic might adversely affect companies' preclinical and clinical development efforts, business operations, and financial results, the extent of the impact on the company's operations and the value of and market for the company's stock will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantine, physical distancing That, as required by law, the company assumes no obligation to update before it makes the statements publicly available, even if new information becomes available in the future. And with that, I'll turn the call over to Anna Protopapas, Mersana's President and Chief Executive Officer.

Anna Protopapas: Thank you, Sarah. Good morning, everyone, and welcome to our Corporate and Financial Update course for the second quarter of 2020. Joining me today with prepared remarks is Brian DeSchuytner, a senior VP of Finance and Product Strategy. The rest of the executive team will be available for your questions.

I will not talk to in the Callback.

Thank you Brian for 2020 has the potential to be as transformative if the first half of the Year our upcoming 1526 am attachment plug to share more comprehensive data with longer followers as well as regulatory interactions and development plans in ovarian cancer around we also intend to provide updates on our progress. It lung cancer as we work to increase enrollment additionally, we're attracted disclose our pre-owned vehicle, as well as the first immunity system in the second half of the year in closing with a prom date that half from the phase one study. We have establish proof-of-concept for 1556 in a variance with initiate an XLT 1592 F150.

To some extent on leadership in the lobby to the space and provide us exactly sure for going in Lancaster and we continue to make great progress in a boxing ring. I think I planned development cavity. We are in the fortunate position to have a strong balance sheet and an experienced team passionate about a bouncing these athletes and executed or lack of providing life-changing agencies become proficient in need with that. I will turn the call over to the operator for questions.

Thank you. Ladies and gentlemen. If you have a question at this time, please press the star and the one key on your telephone to withdraw your question, please press the pound key. Once again, that is star than one to ask a question. And our first question comes from Jonathan Chang your line is open. Hi, good morning. And thanks for taking my questions first question in platinum-resistant May answer. What do you see as the benchmarks for durability of response and PFS?

Anna Protopapas: It has been a transformative first half of the year for Mersana. Despite the challenges of operating in the COVID-19 environment, our team delivered exciting data on XMT-1336, advanced our pipeline candidates, including moving XMT-1592 into clinical development, and executed important finances which have well positioned Mersana. I'm very proud of the entire Mersana team.

Thank you for the question Jonathan. Maybe I'll ask Ryan to answer that question because over the last few months has been quite a lot of time with investigators And discussing a little box forward. So Brian, can you answer this question?

Sure. Absolutely. Hi Jonathan. So in platinum-resistant ovarian cancer of the standard or care is single-agent chemotherapy, either. Or topotecan may have been three contemporary randomized studies that show that use those agents in the control arm and show sort of afford to 12% response rate in a in a medium wage facts of of three to four months. So when when you asked what would we need to do to exceed that we would want to show uh, a response rate that excludes that 12% from the 95% confidence interval, which is probably around you know, 25% if you if you think about a hundred patients and we've already frankly demonstrated that uh, that response rate above that level in the dose-escalation and and an expansion and so in in bringing up package to the FDA, we would look to Showcase not only dog

Anna Protopapas: Because of their commitment and perseverance, we have reached multiple important clinical milestones and made significant progress against our 2020 pipeline goals as we work towards achieving our vision of significantly advancing the ADC field for the benefit of patients. Let me summarize those milestones. First, for XMG1536, we established the maximum tolerated dose of 43 mg per m2 and demonstrated that at this dose, the agent is both active and well-tolerated in both ovarian and lung adenocarcinoma patients without the severe neutropenia, neuropathy, and ocular toxicity observed with other ADC platforms. We presented the dose escalation data at a webcast on March 31, in lieu Second, we demonstrated proof of concept for XMT1336 in heavily pre-treated ovarian cancer patients with a response rate of 35%, including a 10% complete response rate. As a reminder, in platinum-resistant ovarian cancer patients, the standard of care is single-agent chemotherapy with a response rate of 4-12%.

Anna Protopapas: These data were presented at ASCO and in an associated webcast with a key investigator on May 27. Third, we have demonstrated proof of activity with XMT-1536 in lung adenocarcinoma with 1 PR and multiple prolonged stable disease in heavily pre-treated patients in the dose escalation and dose expansion study. For XMT-1592, we filed and cleared the IMD and initiated patient dosing with the objective of rapidly dose-escalating to reach the maximum tolerated dose and to clinically evaluate the differentiation from XMT-1536. The preclinical data supporting the potential of XMT-1592 was presented at a virtual AACR conference on June 22. We have continued to advance our Unisymptom platform. We presented preclinical data at the virtual AACR conference on June 22nd. These data continue to demonstrate that across multiple targets and preclinical models, immunosymptomatic agonist ADCs deliver a robust, target-dependent anti-tumor effect, as well as well-tolerated doses, and include tumor-specific immune memory and other hallmarks of immune activation. These data also show that the unicyclic syn agonist ADC has over 100-fold increased potency as well as significantly lower induction of systemic cytokines when compared to intravenously administered unconjugated syn agonists, supporting the potential for a significantly improved therapeutic index.

Response rate but the depth of response the kinetics of response meaning meaning deepening overtime the duration of response safety tolerability and the robustness and reliability of the biomarker wage against which were making significant Investments.

I got it. Let me just try one more time. What would you need to show from a durability of response and PFS standpoint? I appreciate the color and the response right? But yes, that's your ability any additional color there if you're well, so PFS is not not not generally viewed as a a meaningful parameter and a single-arm study. But of course duration of response is something that would be part of this context off and when we talked with investigators and former FDA reviewers who are in our regulatory Consultants, they do really emphasize that the bright-line is about the response rate off that the duration is considered in that context the same way that safety or biomarker depth and kinetics of response would be considered. So, you know if your question is what's a meaningful duration of response?

On these investigators and Regulatory Consultants generally say that that for months is clinically meaningful in this population because remember the same group cares very poor choice. It's actually probably raises a larger Point as well, which is that helping more patience for longer means moving to earlier lines of therapy exploring combination, you know, I'm doing this platinum-resistant setting as fast to Market entry point in the end stages of the disease, but we hope to have a number of interesting options in earlier line around which will share more details on our plans for 1536 around the end of the year.

Got it. Thank you. That's very helpful.

I just one follow-up for the more comprehensive year-end 1536 data disclosure and ovarian can provide any more granularity on timing and venue or 15% the update at a medical or scientific meeting or are you thinking more along the lines of a press release with a Convent? Well, so Jonathan that's a good question. You may recognize that a lot of these scientific conferences are either been canceled not going virtual. So we are keeping our options open. We would like to include them more comprehensive disclosure any plans we have for further develop the plans you have for further development and Regulatory collection, so they could put 60. So we're keeping at this point our options open you exact value, but I don't think there's a concert or a webcast would be would be dead.

Anna Protopapas: We have also advanced our first-in-class B7ADC into IMD-enabling studies and continue to generate exciting data supporting the potential of this agent to have a positive impact on patients with high and mid-medical needs. Lastly, we executed a successful ATM transaction in April and a public financing in early June that added a combined $240 million in gross proceeds, strengthening our balance. With a first-in-class candidate achieving proof-of-concept in ovarian cancer and proof-of-activity in lung and adenocarcinoma, a second molecule with a potential for compelling differentiation through additional pipeline programs across candidate selection, differentiated platforms, a strong cash position, and an experienced team, Mostada is in a good position to provide life-changing agents to cancer patients in need. Let me now I'll begin with XMT 1536 again.

Understood. Thanks for taking the questions.

Thank you. And our next question comes from for speaker with Cohen. Your line is open good morning congrats and all the progress. I guess my first question Brian just discussed the historical standard wage, you know varying cancer. I'm just curious how Parts impacted that in in some way shape or form here. And do you think parp treatment would impact your pivotal study in any shape?

So I'll start with that is that there may be a Friday. Everything else to add, you know, the responses we've seen have included patients that have been treated with either life or death or so. We're seeing activity in patients and are pre-treated with parts. So we are you know, we're encouraged with the activity we've seen their respective of of what the prior treatments have been whether the standard of has changed with the introduction of parts. I lose that page knowledge of that. Yeah, I would say, you know the principal issue here in the reason that there's such a high unmet need in the setting is that the introduction of new indications for the for the park Inhibitors and and frankly for bed assume that as well have moved those into earlier and earlier lines of therapy. So well, you know, yep.

Anna Protopapas: Our objective with XMT 1536 is to continue to enroll in the ovarian cancer expansion portion of the study over the course of 2020. We had originally planned to recruit about 40 to 45 patients in the expansion cohort, but because of investigator enthusiasm for 1536, we expect to exceed this guidance by the end of the year. Given the deep responses achieved with XMT-1536 in patients with few options, some having seroplatinum as well as methasizumab and POP inhibitors, we are actively working on defining the path to registration. Our goal is to meet with the FDA around the end of 2020 to gain their feedback. We believe, based on high and mid-medical need, discussions with care wealth and regulatory experts, as well as based on precedent, that there is an accelerated approval plan for platinum-resistant ovarian cancer.

Have udders have uh labeled in you know portion of the Platinum resistance setting most patients by the time they get to a platinum resistance will have already seen a a part. That's the that's the way the tread life is going. And so it's a little hard to say whether it affects the performance of the standard of care Parts. Generally when used in earlier settings don't Advance the line because they're used as maintenance which we would count as part of the the same line, but I I think it's very encouraging that the principal issue that Physicians have today is what do I do with my part and Bev pretreated patients who have now failed Platinum. We have shown pretty deep responses.

Anna Protopapas: In addition to our preparations for the FDA discussion and the registration-enabling study, we are also developing our longer-term development plan and life-cycle management plan for XMT 1536. From an operational standpoint, we are expanding the number of sites in the U.S., as well as in Europe, Canada, and Australia. We plan to provide a comprehensive update on XMT1536 in ovarian cancer around the end of the year, given the significantly larger number of patients and longer follow-up expected, the FDA interactions regarding the registration path, and the longer-term life-cycle management plan. We will provide more details regarding the exact value of this update at a later time.

Got you on my next question is for the long indication.

I'm just curious if you don't reach your target enrollment. And you said about 40 to 45 patients. Would you provide to kind of an interim update on the lung trial? And if so any thoughts on potentially when they could be? Yeah, we so good question for is it? I think we are we want to see how it goes with some of the international sites that are coming up with up to you know, beginning to enroll to be honest. I don't we have enrollment projections from those sites, but we live in an unusual world as you can appreciate life. We want to see whether those involvement projections. We'll we'll hold out in the current environment or not. We intend to continue to give updated accordingly month old and it's we get the critical box of of patient experience. We might very well share the data if we did audio various corporate we're dead.

Anna Protopapas: As for our next data update, I am pleased to report that our abstract has been accepted as an e-poster at ESMO's upcoming 2020 Virtual Congress in September. The e-poster is scheduled for September 17, 2020, and we plan to host a live conference call and webcast to discuss this data featuring key investigator Dr. Erica Hamilton, Director, Breast Cancer and Gynecological Cancer Research Program from Sarah Cannon Research Institute at Tennessee Oncology, on September 17 at 8 a.m. The poster will be focused on ovarian cancer patients only.

Well, we provided an interim updated asked what will provide another incremental but into him updated as now my last question on your meeting with the agency on the kind of the end of face to meeting or variant. What are the kind of the key questions for that discussion?

Keep sticking points, whatever you want to call it. Yeah, I think we want to share the data. We want to share with our thoughts are about the backpack forward and gave birth to be SDA.

Anna Protopapas: Note that the data cuddle for the ASCO presentation was May 1st, and the data cuddle for ASMO will be in early August. Remember that the first risk assessment is after two cycles or eight weeks.

Okay. Well great. Thank you very much for taking my questions.

Anna Protopapas: As a result, this disclosure will be an incremental update of the study with additional follow-up on the patients presented at ASCO and risk assessments on a small number of additional patients who were either not available at the time of the ASCO data cut-off or entered the clinic in May. Although this is incremental data, the goal of this disclosure is to increase awareness of XMT-1536 among European investigators, COOs, and physicians. As I mentioned, the disclosure we plan to provide around year-end will provide a more comprehensive data set, as well as the opportunity to discuss the path forward for XMT-1536.

Thank you. Our next question comes from Tom Trader with btig. Your line is open. Good morning. Congratulations, really a kind of a related question to borrow his question in the 1536 1592 switch and lung cancer. What do you need to see from fifteen? Ninety to do you expect to have to get all the way through dose-escalation and get an m d and are you trying to buy us dose-escalation to lung cancer patients or is that also difficult? So the way we

1592 and we're obviously very intrigued with the preclinical data and want to make sure we understand how that translates into clinical validation. So we're trying to go to Salvation as quickly as the tags get potentially at some patients of entity to really understand the home phone. What is the entity compared to sixteen thirty-six and whatever relatively low exposures really Drive where we go back.

Anna Protopapas: We also continue to enroll lung adenocarcinoma patients. However, because of delays in initiating certain lung-focused international sites due to COVID-19, as well as the more intense competition for lung cancer patients, our recruitment rates have been difficult to predict. At this point, we believe there will be challenges to achieving our previously stated goal of enrolling 40 to 45 patients in the expansion cohort by year-end. However, on a positive note, we have begun to see easing of restrictions related to COVID-19 outside the U.S., which should allow us to initiate international sites in the coming weeks and months and accelerate the recruitment of lung patients through the rest of the year. In addition, the initiation of international sites should also allow us to broaden our reach and add geographic diversity to mitigate any potential regional re-emergence of COVID-19, both domestically and globally.

Anna Protopapas: We will continue to evaluate our recruitment progress and will provide updates, including the potential timing of our next data disclosure for this expansive cohort during a planned quarterly call. In parallel to the data from the XMT-1536 Longitudinal Carcinoma Expansion Cohort, we are dose escalating 1592 to gain a better understanding of its profile and its potential for clinical differentiation. As a reminder, the decision as to which molecule we take forward in longitudinal carcinoma will be informed by both datasets and is expected in 2021.

Okay, great. And then very quickly the p78 for program. Are you sure that's a cytotoxic payload is that decision been made given what the where the targets are dead?

Well, maybe I need that to him to answer but we definitely are excited about the the be seventy-four with a payload on Thursday. Yeah. No, thanks for the the question Tom the you're right, you know be seventy-four is a very interesting Target in terms of its expression profile both on on tumor cells as well as on tumor-associated macrophages, but you know, just just to hopefully clearly answer your question the program that we're going to be announcing in you know, by the end of the year is a dolar KDC. So it does use our control on a standard sided toxic payload a fhpa but you know to your point, you know, could you think of other platforms that we have that may be suitable for that Target as well?

Yes, you know that's something that we definitely do consider.

Okay. Thank you.

Thank you. And once again, ladies and gentlemen, if you have a question at this time, please press the star and the one key on your telephone. Once again, that's star one to ask question. And our next question comes from Dodge Jeep shot of gay with HG Wainwright your line is open.

Anna Protopapas: Beyond the important milestones achieved with our clinical ADC candidates, we've also continued to advance our late-stage discovery programs, including our next first-in-class ADC candidate targeting B7H4 and our Immunosynthetic ADC platform. We remain on track to reach our ADC Development milestones this year, including the disclosure of our B7H4 ADC Development candidate and of our first Stink Agonist ADC candidate from our Immunos Before I turn the call over to Brian, I'd like to take a minute to discuss some management changes at Mersana. First, Eva Jack, our Chief Business Officer, will be moving on from Mersana to pursue new opportunities. I'd like to both recognize and thank Eva for all of her contributions. In her over six years here, she's played a key role in building a GNA team, driving partnerships, as well as contributing to private and public financing, including playing a key role in the company's initial public offering. She's an exemplary leader and has built a very capable and high-performing team. We wouldn't be where we are today without Eva's critical contributions.

Hi, good morning, guys. Thanks for taking the call. This is Eric by the way, so could you give us an update on the development of the commercial 92 b h 4 S A and when might be either wage employees in the ongoing clinical studies?

So he actually is currently being deployed North Commercial but we all working towards the commercial a say and I hope we get into the registration part. I think we'll be able to share a lot more information at that more comprehensive disclosure around year-end, but we off and we'll have all the components in place including having it to access to the FDA regarding the development of the commercial Diagnostics by choice how we get that more comprehensive disclosure and then 1592 preclinical data usage appears more enough miles that do tax and shop and we know that it has a longer Half-Life, but can you tell us about safety profile expectations for $15 a month?

Anna Protopapas: Thank you, Eva, and all the best in your new endeavor. Lastly, I would like to recognize Michael Kaufman and announce a change in his title from Senior VP of CMC to Chief Manufacturing Officer. Michael joined Mersana in 2016, bringing with him a wealth of experience in process development, scale-up, formulation, and supply chain management across multiple therapeutic modalities, including ADC. Since joining, Michael has proven to be a strategic leader with immense technical acumen. He's built a top-notch CMC team, and under his leadership, they're working diligently to scale up our novel NDC platforms as we advance XMT 1536, XMT 1592, and our robust pipeline of earlier-stage development candidates. Congratulations, Michael, and thank you for your commitment and many contributions over the years, as well as your continued leadership as we enter this important next stage of Mersana's development, focused on And with that, I will turn the call over to Brian DeSchuytner for an overview of our financial results.

Obviously it's still early but those installations but also cancellation will give us a lot of information about the clinical tolerability profile, but I can walk you got employed which have proven to be quite translatable into the clinic is not human primates. I believed with a safety profile is 50 and 36 I'm saying at least because obviously the doses we we exploring or human primates are not home, you know, so close together that you can see more subtle differences, but it's at least as safe as tolerable as 1536.

Okay, great. Thanks. Thanks for the call.

Thank you. And our next question comes from my cold bare July is open.

Mister rose that your line is on mute, please unmute speaker, please. Sorry about that. Hey guys. Thanks for taking a question and congratulations on all the progress just out of fall back on 1592 and just wanted to clarify that that you're still enrolling both ovarian and lung patients in the dose-escalation and then secondly, maybe you can just, on the pace of enrollment so far and I'm just trying to get an idea of how may be long might be tracking verse ovarian at this point. Just given some of the competitive challenges you mentioned. Thanks. So our objective is to get them to your quickly as possible so long because that's the way to get you up to you as quickly as possible. Once we have that was we have the entity will be the position 2-year lease.

Brian C. DeSchuytner: Thank you, Anna. Good morning, everyone, and thank you for joining us. Before I start, I'd also like to congratulate Michael. It is very well deserved.

Brian C. DeSchuytner: I'd also like to thank Eva for her many contributions over the years, as well as her invaluable partnership with me and my time here at SPA. I'll now review some of the key financial highlights from our second quarter 2020 results. I'll start with our cash position. We ended the second quarter of 2020 with approximately $291.4 million in cash, cash equivalents, and marketable securities, compared to approximately $100 million at the end of 2019. Cash used in operating activities in the second quarter was $15.9 million. In April, we raised gross proceeds of approximately $65 million through our at-the-market facility, or ATM, through the sale of approximately 10.9 million shares at an average price of approximately $6 per share. The transaction used the majority of our ATM facility, and we subsequently established a new ATM facility of $100 million as a housekeeping measure following the transaction.

Potentially both places that we prevent on the patient groups that we're most interested in but our objective now is so since the latest repast Thursday. We're moving to the dosis at a reasonable Pace. The first two doses are only one patient, but obviously you have to wait through the DMV valuation. Even though those early prophets are only one page then we move into the sleep like

Got it, and that's helpful. Thank you.

Thank you, and I'm not showing any further questions at this time. I'm not like trying to call back to Anna protopapas for any closing remarks.

Brian C. DeSchuytner: As a reminder, in June, we raised gross proceeds of approximately $175 million through a public offering of 19 million shares at the offering price of $19 per share, which included the exercise in full of the underwriter's option to purchase additional shares of common stock. In addition to our current cash position, we have the option to draw additional funds of up to $15 million through the existing debt financing agreement with Silicon Valley Bank. Today, we are providing updated cash runway guidance following the public stock offering. We expect that our current cash, cash equivalents, and marketable securities, including the proceeds from the public stock offering, will enable us to fund our current operating plan commitments for more than two years.

I just want to thank everyone for joining us a call today. I think the next six months has there been calling exciting for us, and we really look forward to update it on our corporate office. So that could be the 392 and our earliest pipeline. So, thank you very much.

Ladies and gentlemen, this is today's conference call. Thank you for your presentation. You may not disconnect everyone. Have a good day.

Brian C. DeSchuytner: And now, some of the key highlights from our second quarter 2020 financial results. Collaboration revenue in the second quarter of 2020 was approximately $0.8 million, compared to $0.2 million for the same period in 2019. The increase in collaboration revenue was primarily a result of the completion of research activities associated with the target included in the Merck AGAA. Research and development expenses for the second quarter of 2020 were approximately $15.4 million, compared to $13.8 million for the same period in 2019. The difference was primarily due to an increase in XMT-1536 and XMT-1592 clinical and regulatory experiments. A Milestone Payment Related to the Initiation of XNT-1592 Patients, XNT-1536 Manufacturers, and the Advancement of Companion Diagnostic Development Efforts for the NAPI-2B Biomarkers All of these were offset by a decrease in pre-clinical development manufacturing expenses for XNT 1592 and clinical and regulatory expenses for XNT 1520.

Brian C. DeSchuytner: General and administrative expenses for the second quarter of 2020 were approximately $5.2 million compared to $4.2 million in the same period in 2019. The increase was primarily attributable to an increase in the valuation of stock-based awards granted to employees, resulting in higher non-cash stock compensation expense. The net loss for the second quarter of 2020 was $19.8 million, or $0.33 per share, compared to a net loss of $17.1 million, or $0.36 per share, for the same period in 2019, weighted average common shares outstanding for the quarters ending June 30, 2020 and June 30, 2019 were approximately 61 million and 48 million, respectively. At present, we have 68.4 million common shares outstanding.

Anna Protopapas: I will now turn the call back to Anna.

Anna Protopapas: Thank you, Brian. The second half of 2020 has the potential to be as transformative as the first half of the year. Beyond our upcoming 1536 ovarian cancer disclosure at ESMO, we plan to share more comprehensive data with longer follow-up as well as regulatory interactions and development plans in ovarian cancer around year-end. We also intend to provide updates on our progress in lung cancer as we work to increase enrollment. Additionally, we are on track to disclose our B7H4 double-allowed clinical candidates as well as the first immunosuppressant steak agonist CDC in the second half of the year. In closing, with very promising data in HAC from the Phase 1 study, we have established proof of concept for 1536 in ovary. We've initiated the XMT 1592 Phase 1 Dose Escalation Study to extend our leadership in the lab activity space and provide us with a second shot at goals in lung cancer. And we continue to make great progress in advancing exciting pipeline development candidates. We are in the fortunate position to have a strong balance sheet and an experienced team passionate about advancing these assets and executing on our strategy of providing life-changing ADCs to cancer patients in need. With that, I will turn the call over to the operator for questions.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and the one key on your telephone. To withdraw your question, please press the pound key. Once again, that is star, then one to ask a question. And our first question comes from Jonathan Chang with SVB Leering. Your line is open.

Jonathan Chang: Hi, good morning, and thanks for taking my question. First question: in platinum-resistant ovarian cancer, what do you see as the benchmarks for durability of response in PFS?

Anna Protopapas: Thank you for the question, Jonathan. Maybe I'll ask Brian to answer that question because he, over the last few months, has spent quite a lot of time with investigators and discussed sort of our path forward. So, Brian, can you answer this question?

Brian C. DeSchuytner: Sure, absolutely. Hi Jonathan. In plant-resistant ovarian cancer, the standard of care is single-agent chemotherapy, either doxil or topo-Tcan. And there have been three contemporary randomized studies that use those agents in the control arm and show sort of a four to 12% response rate in a median PFS of three to four months. So when you ask what we would need to do to exceed that, we would wanna show a response rate that excludes that 12% from a 95% confidence interval, which is probably around 25% if you think about 100 patients. And we've already frankly demonstrated that response rate above that level in the dose escalation and in the expansion. And so in bringing a package to the FDA, we would look to showcase not only the response rate but the depth of response, the kinetics of response, deepening over time, the duration of response, safety tolerability, and the robustness and reliability of the biomarker against which we're making significant investments.

Brian C. DeSchuytner: Got it. Let me just try one more time. What would you need to show from a durability of response and PFS standpoint? I appreciate the color and the response rate, but on PSS and durability, any additional color there?

Brian C. DeSchuytner: Well, so PFS is not generally viewed as a meaningful parameter in a single-arm study. But, of course, duration of response is something that would be part of this context. And when we talk with investigators and former FDA reviewers who are now regulatory consultants, they do really emphasize that the bright line is about the response, and that the duration is considered in that context, the same way that safety or biomarker or depth and kinetics of response would be considered. So, you know, if your question is what's a meaningful duration of response, these investigators and regulatory consultants generally say that four months is clinically meaningful in this population Because remember, standard care is very poor. But this actually probably raises a larger point as well, which is that helping more patients for longer means moving to earlier lines of therapy and exploring combinations. You know, we're viewing this platinum-resistant setting as a fast-to-market entry point in the end stages of the disease, but we hope to have a number of interesting options in earlier lines around which we'll share more details on our plans for 1536 around the end of the year.

Brian C. DeSchuytner: Got it. Thank you. That's very helpful.

Anna Protopapas: Just one follow-up. For the more comprehensive year-end 1536 data disclosure in ovary cancer, can you provide any more granularity on timing and venue? Are you thinking of presenting the update at a medical or scientific meeting, or are you thinking more along the lines of a press release for the conference public?

Anna Protopapas: So, Jonathan, that's a good question. You realize that a lot of these scientific conferences are either being canceled or going virtual, so we are keeping our options open. We would like to include in that more comprehensive disclosure any plans we have for further development, and any regulatory interaction. So there are multiple inputs into that, so we're keeping at this point our options open as to the exact venue. But either a scientific conference or a webcast would be possibilities here.

Jonathan Chang: Understood. Thanks for taking the questions.

Operator: Thank you. And our next question comes from Boris Peaker with Cohen. Your line is open.

Boris Peaker: Good morning, and congrats on all the progress. I guess my first question: Brian just discussed the historical standard of care in ovarian cancer. I'm just curious, have PARPs impacted that in some way, shape, or form here, and do you think PARP treatment would impact your pivotal study in any way?

Anna Protopapas: So I'll start with that and then maybe ask Brian if he has anything else to add. You know, the responses we've seen have included patients that have been treated with either PARF or BEV or both. So, we're seeing activity in patients that are pre-treated with PARPs. So, we are, you know, we're encouraged by the activity we've seen, irrespective of what the prior treatments have been. Whether the standard of care has changed with the introduction of PARPs, I'll leave that to Brian. He has specific knowledge about that.

Brian C. DeSchuytner: Yeah, I would say. The principal issue here and the reason that there is such a high unmet need in this setting is that the introduction of new indications for the PARP inhibitors and, frankly, for betasuzumab as well, have moved those into earlier and earlier lines of therapy. So while PARP inhibitors have labels in a portion of the platinum-resistant setting, most patients, by the time they get to platinum-resistant, will have already seen a PARP inhibitor. That's the way the trend is going. And so it's a little hard to say whether it affects the performance of the standard of care. PARPs generally, when used in earlier settings, don't advance the line because they're used as maintenance, which we would count as part of the same line. But I think it's very encouraging that the principal issue that physicians have today is, what do I do with my PARP and VEV-pretreated patients who have now failed platinum? We have shown pretty deep responses.

Boris Peaker: My next question is for the lung indication. I'm just curious, if you don't reach your target enrollment, I think you said about 40 to 45 patients, would you provide some kind of an interim update on the lung trial? And if so, any thoughts on potentially when that could be?

Anna Protopapas: Yeah, so good question, Boris, and I think we want to see how enrollment goes with some of the international sites that are coming up. To be honest, I don't know. We have enrollment projections from those sites, but we live in an unusual world, as you can appreciate, and we want to see whether those enrollment projections will hold up in the current environment or not. We intend to continue to give updates on our quarterly calls, and as we get a critical mass of patient experience, we might very well share that data, as we did with the ovarian cohort where we provided an interim update at ASCO, and we'll provide another incremental update.

Boris Peaker: Great. My last question. At your meeting with the agency, with the FDA, at kind of the end-of-Phase II meeting for variant, what are kind of the key questions for that discussion? Key sticking points, whatever you want to call them.

Anna Protopapas: Yeah, I think we want to share the data; we want to share what our thoughts are about the path forward and gain input from the FDA.

Boris Peaker: Okay, well, great. Thank you very much for taking my question.

Operator: Thank you. Our next question comes from Tom Schrader with BTIG. Your line is open.

Tom Schrader: Good morning. Congratulations. This is really a related question to Boris's question.

Anna Protopapas: In the 1536-1592 switch in lung cancer, what do you need to see from 1592? Do you expect to have to get all the way through dose escalation and get an MTD? And are you trying to bias dose escalation to lung cancer patients, or is that also difficult?

Anna Protopapas: So, the way we will approach 1592, and we're obviously very intrigued by the preclinical data and want to make sure we understand how that translates into clinical validation. So we're trying to move through dose escalation as quickly as we can, get to MTD, and potentially, some patients at MTD to really understand the exposure, what is the MTD compared to 1536, and what are the relative slow exposures, and we'll let that data really drive where we go next.

Tom Schrader: Okay, great. And then, very quickly, the B7H4 program, are you sure that's a cytotoxic payload? Has that decision been made, given where the targets are?

Tim: Well, maybe I'll leave that to Tim to answer, but we definitely are excited about the B7H4 with our dollar lock payload on it.

Tim: Yeah, no, thanks for the question, Tom. You're right, B7H4 is a very interesting target in terms of its expression profile, both on tumor cells as well as on tumor-associated macrophages. I hope we've clearly answered your question. The program that we're... going to be announcing by the end of the year is a DolaLoc ADC, so it does use our controlled bystander cytotoxic payload, AFHPA. But to your point, could you think of other platforms that we have that may be suitable for that target as well? Yes, that's something that we definitely should consider. Thank you.

Operator: Thank you. And once again, ladies and gentlemen, if you have a question at this time, please press the star and the 1 key on your telephone. Once again, that's star 1 to ask a question. And our next question comes from Debjit Chadavpia with HG Wainwright. Your line is open.

Debjit Chadavpia: Hi, good morning, guys. Thanks for taking the call. This is Aaron, by the way. Could you give us an update on the development of the commercial NAPI 2B H-score assay, and when might we see this being deployed in the ongoing clinical studies?

Anna Protopapas: So the assay is currently being deployed, not the commercial assay, but we are working towards the commercial assay, and we'll incorporate it into the registration path. I think we'll be able to share a lot more information at that more comprehensive disclosure around year-end, but we are on track, and we'll have all the components in place, including interactions with the FDA regarding the development of the commercial diagnostic by the time we get to that more comprehensive disclosure.

Anna Protopapas: Okay. Thanks. And then 1592 preclinical data, it appears more potent in mouse models, as you guys have shown, and we know that it has a longer half-life, but can you tell us about the safety profile expectations for 1592?

Anna Protopapas: [inaudible] which have proven to be quite translatable into the clinic. In non-human primates, we see at least as good a safety profile as 1536. I'm saying at least because obviously the doses we explore in non-human primates are not, you know, so close together that you can see more subtle differences, but they're at least as safe and as tolerable as 1536.

Debjit Chadavpia: Okay, great. Thanks for the call. Thank you.

Operator: Thank you. And our next question comes from Mike Oles of Baird. Your line is open. Dr. Oles, if your line is on mute, please unmute it. Sorry about that.

Michael Werner Schmidt: Hey guys, thanks for taking the question and congratulations on all the progress. I just had a follow-up on 1592, and just wanted to clarify that you're still enrolling both ovarian and lung patients in the dose escalation, and then secondly, maybe you can just comment on the pace of enrollment so far, and I'm just trying to get an idea of how maybe lung might be tracking versus ovarian at this point, just given some of the competitive challenges you mentioned. Thanks.

Anna Protopapas: So, the objective of the dose escalation in 1592 is to get to MTD as quickly as possible. So, the study is open to both ovarian and lung cancer patients because that's the way to get to MTD as quickly as possible. Once we have that, once we have the MTD, we'll be in a position to really potentially focus the recruitment on the patient groups that we're most interested in. But our objective now is dose escalation as quickly as we can. And we're moving through the doses at a reasonable pace. The first few doses are only for one patient. But obviously, you have to wait through the DLT evaluation period, even though those early cohorts are only one patient. And then we move into the 3 plus 3 design.

Michael Werner Schmidt: Got it. That's helpful. Thank you.

Operator: Thank you, and I'm not showing any further questions at this time. I'd now like to turn the call back to Anna Protopapas.

Anna Protopapas: I just want to thank everyone for joining our call today. I think the next six months are going to be quite exciting for us, and we really look forward to updating you on our progress, both on XMT 1536 and XMT 1592 and our earlier pipeline. So, thank you very much.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you. Thank you for participating. You may now disconnect. Everyone have a good day.

Operator: BF-WATCH TV 2021