Q3 2020 Mersana Therapeutics Inc Earnings Call
Currently all participants are in listen only mode there.
Operator: All participants are in a listening 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, Executive Director, Investor Relations and Corporate Communications. Please continue.
There will be a question and answer session at the end of this call.
I would now like turn the call over to Sarah Carmody Executive Director Investor Relations and corporate Communications. Please proceed.
Good morning, and welcome to <unk> third quarter 2020 conference call.
Sarah Carmody: Good morning, and welcome to Mersana's third quarter 2020 financial results and business updates. We issued a press release earlier this morning reviewing our third 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.
We issued a press release earlier this morning, reviewing our third quarter 2020 financial results and business update 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.
Sarah Carmody: 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.
After our prepared remarks, we will open the call for Q1 that people.
Before we begin I'd like to mention that our fourth that our call will contain forward looking statements within the meaning of federal Securities Law. These are not statements of historical facts and are based on managements beliefs and assumptions and on information currently available there.
Sarah Carmody: They are subject to risks and uncertainties that could cause the actual results and the implementation of a company's plans to vary materially, including the risks that 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, and subsequent files. These risks are discussed in the company's SEC filings, including, without limitation, In addition, while we expect that the COVID-19 pandemic might adversely affect the company's preclinical and clinical development efforts, business operations, and financial results, the extent of the impact on the company's operations and the value of the market for the company's common 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, quarantines, physical dis 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.
They are subject to risks and uncertainties that could cause actual results and the implementation of the companys plans to vary materially including the risks that are early encouraging preclinical results from some key 15, 36, and XM T 15, 92, or not necessarily predictive or the result of our ongoing or future discovery program.
Our clinical studies that the development and identification of the Companys product candidate and new platforms will take longer and ore costs 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 limitation. The Companys annual report on form 10-K filed on February 22020, the company's quarterly report on form 10-Q for the quarterly period ended March 31st 2020 filed on May 2020 and something.
Good filings.
In addition, while we expect that the colder nights and pandemic might adversely affect the companys preclinical and clinical development efforts business operations and financial results. The extent of the impact on the company's operations and the value of the market for the company's common stock will depend on future developments that are highly uncertain and cannot be predicted.
Confidence at this time.
Chassis ultimate duration of the pandemic travel restrictions corn sales physical distancing and business clothes are required in the U.S. and in other countries and the effectiveness of actions taken globally and pain and shrink.
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 Anup I was hopping resigned as president and Chief Executive Officer.
Sarah Carmody: And with that, I'll turn the call over to Anna Protopapas, Mersana's President and Chief Executive Officer. Thank you, Sarah. Good morning, everyone, and welcome to the third quarter of 2020 Corporate and Financial Update Call. Joining me today with prepared remarks are Brian DeSchuytner, our Senior VP of Finance and Product Strategy, and Tim Leunger, our Chief Science and Technology Officer. I'm also joined by the rest of the executive team, who will be available for you, including the newest member, Chuck Miller, Senior Vice President of Regulatory Affairs. Chuck joined us in late August and brings with him over 25 years of regulatory affairs, program leadership, and product development experience, expertise that is critical at this point in Mersana's evolution. Most recently, Chuck was Vice President of Regulatory Strategy and Labeling at Tesaro before its acquisition by GSK and was instrumental in the approval of Vigula in multiple indications and geographies. Welcome, Chuck.
Thank you Sarah good morning, everyone and welcome to the third quarter consoles have been twin peaks corporate and financial update call. Joining me today with prepared remarks, well right I'm, sorry, no, let's see new PPL 400 could pull that spread between the two.
Blowing through a cheap sorry since it can always be open Sir I'm also joined by the rest of the executive team will be available for your questions.
You would think the newest members truck Mendoza senior Vice President of regulatory Affairs.
<unk> joined US in late August and brings with him over 25 years of regulatory affairs smoke leadership in product development experience.
Good piece that is critical at this point.
In most softness in London.
Most recently took the sports person in the regulatory strategy at least when he got to similar before you click positions like GSK and was instrumental in the approval to be to the multiple would be keeps its a joke well.
Welcome truck, we are very excited to have you on board.
Anna Protopapas: We are very excited to have you on board. I will now turn to the business update. Since the beginning of the year, we have continued to execute against our goals and milestones and have made significant progress in advancing our clinical and early stage pipeline of innovative APC product candidates. I'll begin with 1536.
I would now turn to the business healthy.
The beginning of the year you have continued to execute against those goals and milestones and have made significant coke with you. That's one thing that's really cool and early stage pipeline you know but.
You called a copy please.
I'll begin with 15, so do you see it.
Anna Protopapas: In September, we provided an incremental data update on the ovarian cancer cohort of our expansion portion of the XMT 1536 phase one study as part of the virtual asthma week. These data were encouraging because they demonstrated a safety, tolerability, and activity profile consistent with the compelling expansion data previously reported at ASCO. In terms of the safety data presented at ESMO, treatment-related adverse events were primarily grade 1 and grade 2 fatigue, nausea, decreased appetite, vomiting, and transient AST elevations, and were consistent with the expansion data previously reported at ASCO. No new safety syphilis were observed. Importantly, there were no reported cases of severe neutropenia, peripheral neuropathy, or ocular toxicity often seen with other ATC platforms. In terms of activity data presented at ESMO, overall response rate and disease control rate remain consistent with the robust activity seen in the data previously reported at ASCO. Specifically, of the 29 patients that were evaluable for response, two achieved confirmed complete responses, and eight achieved confirmed partial responses for an objective response rate of 34%. Additionally, 45% achieved stable disease for an overall disease control rate of 79%. Responses appear to deepen over time.
In September we provided incremental dig the uptake on deal buried Pepsico football expansion portion of it could be could be 36 phase one study, it's part of the virtual as mobility.
These data were encouraging because they demonstrated the safety tolerability and activity copel consistent with a compelling expansion things up.
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In terms of the safety data presented at ESMO, We really did that Susan you acquired by really great. One agreed to put peak nausea decreased appetite for me and the currency in the Uinta Basin and were consistent with your son Deca core because.
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Anna Protopapas: 50% of patients remain unstudied as of this data. Note that the population studied in the expansion cohort represents late-stage patients with a very high unmet need. 30% of patients in our expansion cohort were platinum refractory, meaning disease progression within less than three months of their last dose of platinum. It is well-established that platinum refractory patients did even less poorly than platinum resistant patients.
People, who said no patients remained on study as of the date that cuts.
No [laughter] conviction dug deep into expansion cohort group, we since late stage patients with a very high unmet need.
30% of patients you know expansion cohort were Latino lastly, really quickly.
Cookware should we be less than three months, if they're not Stokes correct, you could well established the copies a week or two weeks, it's been more who will coordinate the copy them resistance.
70% of the patient pardon me with the system up and peace Sweet person Clark.
Anna Protopapas: 70% of the patients had prior treatment with bevacizumab, and 53% had prior treatment with PARP inhibitors. In fact, both patients with confirmed complete responses had prior treatment with both bevacizumab and PARP inhibitors. The only remaining treatment options for these patients are currently single-agent chemotherapies, such as peculated doxorubicin or topotecan.
Paul could be because it.
In fact, both patients with complete responses.
We booked business, it's about fed policy because.
The only remaining treatment options.
These patients.
Currently equally to chemotherapy.
That could be good books of you could send those cope with pizza.
Oh, sorry, sorry, good could that be.
Anna Protopapas: Often-cited contemporary studies, including the now-failed FORWARD-1, JAVELIN-200, and CORELL studies, demonstrate the performance of single-agent chemotherapy is at best a 12% objective response rate for platinum-resistant patients that have had up to three lines of therapy. The population in our expansion cohort is a more heavily pre-treated population, with an even higher unmet medical need and significantly more prior pervasizomab or PAR Specifically, 40% of the patients in the expansion cohort had four or more lines of therapy. Prognosis for patients who have more than three lines of therapy is not well characterized, but older longitudinal studies have shown repeatedly that outcomes deteriorate with increased lines of therapy. These patients represent the most challenging group that physicians must treat today.
Greetings adult females with one jopling to hug. Good Coriell study demonstrates the performance. It seems to me to chemotherapy is there a 12% objective response rate will not be the worst this in patients that have had the nice et cetera.
The population function cope with the more hoping could come to calculate should we.
With an even higher unmet medical need and significantly more cargo good lets says about ballpark.
[laughter] only 40% of the patients function cohort huts waterborne lines of therapy.
No. This is for patients with boards and we like to therapy.
Well correct to us, but all good luck to do those studies have shown.
The arc outcomes to living with increased nicely therapies.
Patients will present, the most challenging group [laughter] today.
We are very encouraged working copano because it could be.
We have no significantly exceeded the sports with all the standard of care, both the dose escalation and expansion, which sits with the study you bid the women's roles have been good I'd like to see pieces with more clarity were exposed to give us it's about the coffee stupid. Those we also absorbed.
Anna Protopapas: We are very encouraged with the emerging profile of XMT 15. We have now significantly exceeded the response rate of the standard of care in both the dose escalation and expansion portions of the study, even though we're enrolling more heavily pre-treated and later-stage patients with more prior exposure to Bevacizumab and PARP inhibitors. We also observed significant and durable reductions in tumors, including a late-stage patient who experienced a complete response and had been on study for 42 weeks as of the date of release. Another complete response patient who came off study at week 19 was still in complete response when we scanned at week 28 without additional therapy. And a third patient with multiple five-centimeter lesions achieved complete elimination of those tumors.
Difficulty juniper reduction two words included delayed.
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In the third quarter gifted granted fast track designation for example, 50 could be six for this patient population.
Floors on that score you the highest but it's going to be good treatment to patients with copy the resistant declared cats and the potential of the gay to help with clinically meaningful impact on peaks.
Anna Protopapas: Although early and still a small number of patients, we are encouraged by the duration of the study, particularly in patients with a higher level of TB expression and those who achieve deep responses. In the third quarter, the FDA granted FASTRAC designation for XMT1536 for this patient population, further underscoring the high-end medical need for a treatment for patients with platelet-resistant ovarian cancer and the potential of the agent to have a clinically meaningful impact on patients. Turning now to the phase one study and our next step. We have exceeded our goal of enrolling 40 to 45 patients in the ovarian cancer expansion portion of the study with continued investigator enthusiasm for XMT 1536. Recall that the ESMO data included 47 ovarian cancer patients at the data cutoff date of August 18, 2020.
Turning now to the phase one study.
Six.
We have exceeded our goal of enrolling 40 to 45 piece you could be a very tough too expensive portion of the study we could you could but to do it so it could be.
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Recall that be it would be good to be 47 ovarian cancer patients. The data cutoff date of August 18, 2000, and Twitter feed.
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Our differentiated pool, so we don't severe due to PDL Scully will do open the ocular toxicity they offer the potential for could be big since we are the only two such therapy or you don't quantities. We are also developing does no good could be settled that sounded like cycle Buddies Claude.
Anna Protopapas: Since then, we have continued to enroll patients and accumulate further safety, tolerability, efficacy, duration, and biomarker data. We expect to continue to enroll ovarian cancer patients in this expansion portion of the study through the remainder of the year and until the initiation of the anticipated registration-enabling study. We're also preparing to meet with the FDA in the near future to gain their feedback on the path to registration for XMT 1536. We believe, based on high-end medical need, discussions with key investigators and regulatory experts, and precedent in ovarian cancer, that there is a potential for a path to accelerated approval in platinum-resistant ovarian cancer. A differentiated profile without severe neutropenia, peripheral neuropathy, or oscillatory toxicity may offer the potential for combinations with other agents, such as chemotherapy or in youth non-collagen.
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Given the significant ongoing activities associated with your clubs.
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Anna Protopapas: We are also developing a longer-term development plan and lifecycle management plan for XMT 1536, including options for combination studies to evaluate the potential of moving XMT 1536 into early alliance within the ovarian cancer treatment landscape. Given the significant ongoing activities associated with the advancement of XMT 1536 in ovarian cancer, we plan to hold an Analyst and Investor Day around the end of the year to provide an update. The Analyst Day will include updates on three components. First, we will provide an additional view of the expansion cohort data that will include more patients and longer follow-up. Our preliminary guidance on the scope of this additional data update is that it will include approximately a total of 40 to 45 resister-valuable patients, a total of approximately 65 to 70 patients, and approximately three months of follow-up to the August asthma data.
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I'll now provide an update on the long. It then of course, nobody <unk> co.
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Since our last call, we have initiated new international sites and have begun to see some momentum picks mineral, but we expect recruitment would contiguous with the rest of the year and into 2021, we will discuss our plans to disclose data from the lumpy, but to cope with when we lay out those goals and milestones.
2000 quick ones you know these yodlee.
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The dose escalation portion of the phase one studies moving forward as planned we will continue to work to achieve rapid doses colleagues should luxury made two big years, and we'll discuss your plans to disclose doses can they should data when we lay out those goals and milestones for 2021, you know each category.
Anna Protopapas: Given that the expansion study will still be open and enrolling at the time of this update, there will be additional patients on the study that are not yet resistant to value. Second, we will define our plans for a registration-enabling study informed by FDA feedback. And third, we will outline our objectives for longer-term life-cycle management studies that will evaluate the potential of this agent in the platinum-sensitive setting as we advance our vision of establishing XMT1536 as a transformative agent in the treatment of ovarian cancer. The logistics of this event will be announced once our plans are finalized.
As we have outlined the pasta objective was to come.
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Lastly, we plan to disclose data support the golf course.
Thing I could see he had the big pullback in unison.
Could collectibles in November it won't be snowbird each for you see development can be paid around the end of the year.
I would go towards the call over to Tim.
We will provide more details about what disclosures relating to these two exciting quite like mall its sales.
Thank you Alan and good morning, everyone. As I said, we've continued to make significant progress in advancing our be 70 toward dollar log and immuno can can sting agonist 80 feet late stage discovery program.
Anna Protopapas: I'll now provide an update on the lung adenocarcinoma cohort in the expansion portion of the phase one XMT 1536 study. Since our last call, we have initiated new international sites and have begun to see some momentum in patient enrollment. We expect recruitment will continue through the rest of the year and into 2021.
I'll begin with our upcoming preclinical disclosures for our you know since then AIDC plot of core.
This morning, particularly abstract.
Well, we could see web site did you.
Moving on November 11th at nine am Eastern time, the ecost or will be available on demand in that 50 virtual poster hall.
Anna Protopapas: We will discuss our plans to disclose data from the lung expansion cohort when we lay out our goals and milestones for 2021 in early January. I'll now turn to XMT 1592, Arzola Sentinel ADC, targeting NAPI 2B. The dose escalation portion of the Phase 1 study is moving forward as planned.
[laughter] poster describes novel research undertaken by him responsible parties elucidating the mechanism of the Nate immune activation to activation of the Sting pathway with the tumor targeted Sting 80 c.
The research demonstrates that induction of the Sting pathway, which facilitated by a one two punch from both the uptake of the immuno Symphony do you see in tumor resident immune cells through FC Gamma receptor.
Anna Protopapas: We will continue to work to achieve rapid dose escalation throughout the remainder of the year, and we'll discuss our plans to disclose dose escalation data when we lay out our goals and milestones for 2021 in early January. As we have outlined in the past, our objective is to compare the XMT1536 longer than carcinoma expansion data with the XMT1592 data to make decisions as to which molecule we will take forward. Lastly, we plan to disclose data supporting our first SYNC Agilis ADC candidate from our Immunosynthon platform in November and our B7H4 ADC development candidate around the end of the year. With that, I will now turn the call over to Tim, who will provide more details on our planned disclosures relating to these two exciting pipeline models. Thank you, Anna, and good morning, everyone.
And tumor antigen mediated AIDC internalization, that's thing activation occurs in both of these cell types based.
Based on in vitro experiments in mono culture. It has been widely believed that the sting pathway is silence in cancer cells.
However, the data we presented in a poster overturns. This widely held misconception are seeing 80, c. activates the thing about pathway in both tumor resident immune cells and in the tumor cells, providing a one two punch to the tumor resulting in robust efficacy in immune memory and.
Differentiating this approach from other innate immune activators.
In addition, we observed robust activity across multiple targets in model demonstrating the breadth of a quick ability of this platform and its potential for building a pipeline of immuno Synthon 80 seeds.
In addition to the city poster we issued a press release. This morning announcing that we will be hosting a webinar bar on Monday November 16 at eight am Eastern time, where we plan to provide a comprehensive overview of the immuno Synthon Sting agonist 80 C. platform.
Tim Leunger: As Anna said, we've continued to make significant progress in advancing our B7H4 DolaLoc and immunosymptom sting agonist ADC late-stage discovery programs. I'll begin with our upcoming preclinical disclosures for our ImmunoSymptom ADC platform. This morning, our CIDSE abstract was posted on the CIDSE website. Beginning on November 11th at 9 a.m. Eastern Time, this e-poster will be available on demand in the CIDSE Virtual Poster Hall. The SISTI poster describes novel research undertaken by molecular scientists elucidating the mechanism of innate immune activation through activation of the STING pathway with a tumor-targeted STING ADC. The research demonstrates that induction of the STING pathway is facilitated by a one-two punch from both the uptake of the immunosympton ADC in tumor-resident immune cells through FC gamma receptor and tumor antigen-mediated ADC internalization, and that STING activation occurs in both of these cell types.
The event will cover.
A summary of the science behind this is p. poster.
The rationale for the development of Sting agonist. They do you see that.
Development and optimization of the immuno Synthon platform.
Potential listing agonist 80 fees across multiple targets in indications.
Preclinical data supporting the Companys, the municipals Edcs pipeline as.
As well as the R&D time line for our first development candidate on this platform.
I'll now discuss the next steps for B seven age for our next first in class Dongle lock AIDC Devil development candidates.
We are excited about these terminates for as an 80 feet target because it has a unique expression profile. It is expressed on tumor cells argues also expressed on immunosuppressive tumor associated macrophages.
Tim Leunger: Based on in vitro experiments in monoculture, it has been widely believed that the Thing pathway is silenced in cancer cells. However, the data we present in this poster overturns this widely held misconception. Our STING ADC activates the STING pathway in both tumor-resident immune cells and in the tumor cells, providing a one-two punch to the tumor, resulting in robust efficacy and immune memory, and differentiating this approach from other innate immune activators. In addition, we observed robust activity across multiple targets and models, demonstrating the breadth of applicability of this platform and its potential for building a pipeline of immunosymptom ADCs. In addition to the CITSE poster, we issued a press release this morning announcing that we will be hosting a webinar on Monday, November 16th at 8 a.m. Eastern Time where we plan to provide a comprehensive overview of the immunosymptom sting agonist ADC platform. The event will cover a summary of the science behind the TZITZI poster. The rationale for the development of Sting Agonist ADCs
This represents an ideal expression profile for a dollar blockade you see.
Targeting B 70, twond tumor cells provide good direct cytotoxic effect, while targeting b seven each for or tumor associated macrophages can lead to capitalism or be a D. C and release of the door locks payload in the tumor environment, where it can further contribute to bystander, killing and immunogenic cell death.
Oh, resulting in activation of dendritic cells, and prompting a potential immune response.
What we call a perfect storm.
We have generated some very compelling efficacy and non human primate tolerability data with both our dollar Flexon Angola's Synthon AIDC platforms to support the selection and further development of a first in class B seven age for Dholakia D.C., we plan to present some of these data and disclose our be somebody.
It's for development candidate at the analyst and Investor Day event, we are planning to hold around year end.
Look forward to sharing more information on this exciting program at that time.
And with that I'll now turn the call over to Brian for an overview of our financial results.
Thank you Tim Good morning, everyone and thank you for joining us on a personal note I'm really happy to be working with Chuck again, so welcome to the cheap.
Tim Leunger: The Development and Optimization of the Immunosynthin Platform and the potential of sting agonist ADCs across multiple targets and indications Preclinical data supporting the company's immunosymptomatic ADC pipeline, as well as the IND timeline for our first development candidate on this platform. I'll now discuss the next steps for B7H4, our next first-in-class Dololock ADC development candidate. We are excited about B7H4 as an ADC target because it has a unique expression profile. It is expressed on tumor cells, but it is also expressed on immunosuppressive tumor-associated macrophages. This represents an ideal expression profile for a DOLA lock ADC.
I'll now review some of the key financial highlights from our third quarter 2020 results and I'll start with our cash position.
We ended the third quarter of 2020 with approximately 271 million in cash and cash equivalents, having disposed of marketable securities held at the start of Q3 at maturity without new purchases due to the low interest rate environment. This compares to approximately $100 billion in cash cash equivalents and marketable securities.
At the end of 2090 net cash used in operating activities in the third quarter was $20.2 billion.
In addition to our current cash position, we have the option to draw funds to be amended existing debt financing agreement with Silicon Valley Bank refinanced in August of this year.
Tim Leunger: Targeting B7H4 on tumor cells provides a direct cytotoxic effect, while targeting B7H4 on tumor-associated macrophages can lead to catabolism of the ADC and release of the dololoc payload in the tumor environment, where it can further contribute to bystander killing and immunogenic cell death, resulting in activation of dendritic cells and prompting a potential immune response. What we call a perfect storm We have generated some very compelling efficacy and non-human primate tolerability data with both our DolaFlexin and DolaSynthin ADC platforms to support the selection and further development of a first-in-class B7H4 DolaLoc ADC. We plan to present some of these data and disclose our B7H4 development candidate at the Analyst and Investor Day event we are planning to hold around year-end. We look forward to sharing more information on this exciting program at that time. And with that, I'll now tend to call over to Brian for an overview of our finances. Thank you, Tim. Good morning, everyone.
Today, we are reiterating our prior cash runway guidance, we expect that our current cash cash equivalents, including the proceeds from a public stock offering in Q2 will enable us to fund our current operating plan commitments for more than two years.
And now some of the key highlights from our third quarter 2020 financial results collaboration revenue in the third quarter of 2020, it was immaterial compared to the point $8 million for the same period in 2019 the.
The decrease in collaboration revenue was primarily a result of the completion of research services associated with a target included in the Merck Kgaa agreement in the third quarter of 2019.
Research and development expenses for the third quarter of Twentytwenty were approximately $16.5 million compared to $13.7 million for the same period in 2019. The difference was primarily due to an increase in manufacturing activities. For example, 15 36, and our discovery stage programs and increasing.
Essentially 15 36 in X.M.T. 50, 92 clinical expenses increased headcount and an increase in valuation of stock based awards.
Increase in consulting and professional fees and advancement of companion diagnostics development efforts from an attitude be biomarker.
All of these were partially offset by a decrease in preclinical development and manufacturing expenses for XM T 15, 92, and the discontinuation affect them T 15 22.
Brian C. DeSchuytner: And thank you for joining us. On a personal note, I'm really happy to be working with Chuck again. So, welcome to the team. I'll now review some of the key financial highlights from our third quarter 2020 results, and I'll start with our cash position. We ended the third quarter of 2020 with approximately $271 million in cash and cash equivalents, having disposed of marketable securities held at the start of Q3 at maturity without new purchases due to the low interest rate environment. This compares to approximately $100 million in cash, cash equivalents, and marketable securities at the end of 2019. Net cash used in operating activities in the third quarter was $20.2 million.
General and administrative expenses for the third quarter Twentytwenty were approximately $5.9 million compared to $4.4 million in the same period in 2019. The increase is primarily attributable to an increase in consulting and professional fees an increase in the valuation of stock based awards and an increase in facility related costs.
As a result of the extension of our lease in March 2020.
Net loss for the third quarter of 2020 was $22.5 million or 33 cents per share compared to a net loss of $16.8 million or 35 cents per share for the same period in 2019.
Weighted average common shares outstanding for the quarters ended September Thirtyth 2020, and September Thirtyth 2019 were approximately 68 million and 48 million respectively.
Brian C. DeSchuytner: In addition to our current cash position, we have the option to draw funds through the amended existing debt financing agreement with Silicon Valley Bank, refinanced in August of this year. Today, we are reiterating our prior cash runway guidance. We expect that our current cash and cash equivalents, including the proceeds from the public stock offered in Q2, will enable us to fund our current operating plan commitments for more than two years. Here are some of the key highlights from our third quarter 2020 financial results. Collaboration revenue in the third quarter of 2020 was immaterial compared to $0.8 million for the same period in 2019.
I'll now turn the call back to Ana.
Thank you, Brian I'm very pleased with us significant accomplishments this year and we remain on track to deliver on the remainder of uncles and milestones.
Set out at the beginning of the year.
Two weeks off its remaining goals and milestones we're planning for a book to Bill on that list that exists today yearend.
We will provide an update acceptances, we could see including more data from the ovarian cancer to cope with a bunch of course Oh.
The phase one study for 15, so DC. We're also planning could disclose data supporting a first in class B seven each for developing candidate and the data.
Support advancing this program into the clinic this is bad debt.
Thirdly, we will host a wed be dog focus, although even with seem to think I Couldnt DPC platform on November 16, where we will provide further preclinical data to support the significant potential of this platform to totally twin Ti has been a transformative year for mersana today.
Brian C. DeSchuytner: The decrease in collaboration revenue was primarily a result of the completion of research services associated with a target included in the Merck KGAA agreement in the third quarter of 2019. Research and development expenses for the third quarter of 2020 were approximately $16.5 million, compared to $13.7 million for the same period in 2019. The difference was primarily due to an increase in manufacturing activities for XMT-1536 and our Discovery Stage programs, an increase in XMT-1536 and XMT-1592 clinical expenses, increased headcount, and an increase in valuation of stock-based awards, an increase in consulting and professional fees, and advancement of companion diagnostics development efforts for the NAPI 2B biomarker. However, all of these were partially offset by a decrease in preclinical development and General and administrative expenses for the third quarter of 2020 were approximately $5.9 million, compared to $4.4 million for the same period in 2019.
The more solid team has delivered against goals. Despite the challenges associated with COVID-19.
Want to thank each one of our employees for their hard work and their unwavering dedication to advancing science and helping patients. We look forward to sharing the additional progress was made in advancing the clinical late stage discovery program and towards reaching over.
Arching goal developing like treating PBC that significantly improve outcome people living with cancer.
With that I will turn the call over to the old Greek acuity.
Thank you, ladies and gentlemen to ask the question you would need to press star one on your telephone to withdraw your question press the pound key please stand by what we compile the queue any roster.
Our first question comes from Jonathan Chang with SVB Leerink. Your line is open.
Good morning, and thanks for taking my questions first.
First question can you talk about your thoughts on strategy for 15, 36, and earlier lines of ovarian cancer in combination settings.
Jonathan Thank you for the question, we are working on that and it is like.
As we've said in the prepared remarks, we will be sharing that clod with investors at the analyst and investor meeting around yearend, but you can imagine that given the collateral go the safety profile called Christie 36, there are some very interesting opportunities.
Brian C. DeSchuytner: The increase was primarily attributable to an increase in consulting and professional fees, an increase in the valuation of stock-based awards, and an increase in facility-related costs as a result of the extension of our lease in March 2020. Net loss for the third quarter of 2020 was $22.5 million, or $0.33 per share, compared to a net loss of $16.8 million, or $0.35 per share, for the same period in 2019. The weighted average common shares outstanding for the quarters ended September 30, 2020 and September 30, 2019 were approximately $68 million and $48 million, respectively.
Combined with <unk>.
The earlier line. So a couple of the other agents without seeing a dose limiting overlapping toxicities. So youre working on those opportunities that we'll be able to describe in more detail once we get to our big.
Yes.
Got it thank you.
And second question can you talk about how you're thinking about the lung cancer opportunity for 15, 36 cents to 92 or one of the reasons for confidence that 15 36, and all are 15 92 could work in lung cancer.
So as we published before we have done extensive work to correct. The expression of the God teaches you had loved that and of course, you know Mark we know that not b to B is expressed in those patients. It's expressed already brought fleet.
Anna Protopapas: I'll now turn the call back to Anna. Thank you, Brian. I'm very pleased with our significant accomplishments this year, and we remain on track to deliver on the remainder of our goals and milestones we set out at the beginning of the year. To recap these remaining goals and milestones, we're planning for a virtual analyst and investor day around year end, where we will provide an update on XMT 1536, including more data from the ovarian cancer cohort of the expansion portion of our phase one study for 1536. We're also planning to disclose data supporting our first-in-class B7H4 development candidates and the data to support advancing this program into the clinic at this event. Additionally, we will host a webinar focused on our immunosynthesizing agonist ADC platform on November 16, where we will provide further preclinical data to support the significant potential of this platform. 2020 has been a transformative year for Mersana to date. The Mersana team has delivered on goals despite the challenges associated with COVID-19.
We also know that lung cancer.
Is responsive to the guy to prevent payloads, which is the clients.
Proprietary dolan, okay. Those Furthermore, we disclosed early data at.
And we sold one response in a patient in the 40 milligram per meter square dose or the dose escalation and with multiple curable.
We are continuing to recruit said to get more patient experience here and we're continuing to recruit we're encouraged with the pickup.
We patient recruitment in the last couple of months and we look forward to disclosing data in 2021 or both.
Well, that's that's where it gets done.
The differentiator Ko Pablo.
Two and we would be able to compare the two that makes the best decision data to the decision.
To the Nic data.
Development and Dr. <unk>.
But then of course, you know but patients.
Got it. Thank you and can you just remind us the.
He differentiating points between 15 92 at 15, 36, and how that could.
Potentially give you guys a leg up in lung cancer.
So you know it's.
Pre clinical models, we have observed that 15 going to has four full has a fourfold higher efficacy.
Anna Protopapas: I want to thank each one of our employees for their hard work and their unwavering dedication to advancing science and helping patients. We look forward to sharing the additional progress we've made in advancing our clinical and late-stage discovery programs and towards reaching our overarching goal of developing life-changing ADCs that significantly improve outcomes for people living with cancer. With that, I will turn the call over to the operator for Q&A. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone.
And then at least as good Tolerability, Doug 50, 36, which is pretty exciting Cuba, but we've seen some merger activity.
50, 36 secret tribute that to increase.
Increased cubo penetration, which we.
<unk> demonstrated a connecticut so.
So we were moving ahead said here the dose escalation we dose the first Pete should with 50 92 in May and were proceeding with the dose escalation. So would 2021, we really look forward to looking at the doses got leases they got good stuff.
Operator: To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Jonathan Chang with the SVV Lyrinc. Your line is open.
Jonathan Chang: Good morning, and thanks for taking my question. First, can you talk about your thoughts and strategy for 1536 and earlier lines of ovarian cancer and in combination settings? Jonathan, thank you for that question.
How's that clinical differentiation translates into patients.
And you could truly translates into patients could have a very exciting.
Hey, good club, because it would be cool, but over it already.
Anna Protopapas: We are working on that plan, and as we've said in our prepared remarks, we will be sharing that plan with investors at the analyst and investor meeting around year-end. But you can imagine that given the tolerability and safety profile of 1536, there are some very interesting opportunities to combine it with some of the earlier lines of some of the other agents without seeing dose-limiting overlapping toxicities. So we are working on those opportunities, and we'll be able to describe them in more detail once we get to our next disclosure. Got it, thank you.
Uh huh.
Got it. Thank you very much for taking my question.
Thank you. Our next question comes from Boris Peaker with Cowen Your line is open.
Great. Good morning, and thanks for taking my questions first I just want to kind of maybe set expectations on 15 36 cents durability of response, what do you think is the.
Minimum meaningful durability of response here.
Yeah.
So.
[laughter], Boris we have Uh huh.
Anna Protopapas: And second question, can you talk about how you think about the lung cancer opportunity for 1536 and 1592? What are the reasons for confidence that 1536 and or 1592 could work in lung cancer? So, as we've published before, we have done extensive work to characterize the expression of the antigen in lung adenocarcinoma.
Chris.
Hi, I see the data will tell us what the overall to up though.
Well be.
Well I think we're still gathering data and share the data Oh, Yes, Oh post to your question is.
How would the if you look at the overall profile of the drug I would maybe us Chuck who has the most experience.
Anna Protopapas: We know that NAPI-2B is expressed in those patients. It's expressed fairly broadly, and we also know that lung cancer is responsive to the antitumor payload, which is the class of our own proprietary dollar-lock payload. Furthermore, we've disclosed some early data, and we saw one response in a patient at the 43 milligram per meter squared dose of the dose escalation, and we've seen multiple curable stable diseases. We're continuing to recruit.
The type of debt reduction said, particularly.
With ovarian cancer drug to baby ship, but.
Uh huh.
Sure and thank you so.
So I could say that based on the discussions that we've had with investigators over the years and my own personal experience. Some indication it's clear to me that FDA looks at the totality of data and balances the risk benefit.
I can say that having worked in ovarian cancer and then single arm studies I joined Mersana excited about the prospects of 15, 36, and I remain excited about those prospects.
Anna Protopapas: As we said, we need to get more patient experience here, and we're continuing to recruit. We're encouraged by the pickup we've seen with patient recruitment in the last couple of months, and we look forward to disclosing data in 2021, both on 1536, as well as better understanding the differentiated profile of 1592, and we will be able to compare the data and make the best decision, data-driven decision, as to the next steps in developing a NAPI-2B ADC in lung and in a carcinoma patient. I got it.
Okay.
I guess the second question is.
How important is the delta in terms of response rate between the Napa to be high now appear to be low even if you move the actual cut off threshold, how critical should the Dell delta be.
I'm not sure I understand [laughter].
Okay. If I look at the response rate in a nappy to be low patient and a nappy to be high patients there's going to be some kind of a delta. There I believe was about 6% to show in the prior update that you had a I'm curious how important is it to have a high difference in response rates between nappy to be low and happy to be high patients.
So we are encouraged.
With both the overall on the old response rate in the overall population, but we're also looking at you know the response rate in this sub group. Our objective is really to look at the totality of the data and really understand the best as we can.
Anna Protopapas: Thank you. And can you just remind us, um, the... Key differentiating points between 1592 and 1536 and how that could potentially give you guys a leg up in the long term? So, in preclinical models, we have observed that 1592 has, Thank you very much. And if it truly translates into patients, which could be a very exciting agent, because it would be an improvement over an already active agent. That's about it.
How collection of peaks and park, a patient outcome so be on the overall response rate, we're seeing some could square the bio marker has impact on other important patient outcomes and our objective on the loan by the time, we launched the registration of.
We believe that led to a good start into flight, how we would use patient selection to improve patient outcomes. So there is a possibility we would look at the total population and use the dot com.
Jonathan Chang: Thank you very much for taking my questions. Thank you. Our next question comes from Boris Peaker with Cowen. Your line is open.
Okay button to a diagnostic there's also the possibility that we will see like patients for their registration trial and use the diagnostic so cool cool.
Boris Peaker: Great, good morning, and thanks for taking my questions. First, I just want to kind of maybe set expectations for 1536 and durability of response. What do you think is the... Minimum Meaningful Durability of Response here?
Cardiac diagnostic I think we'll look we need to continue to look at the totality of the data and make the best thing.
Im sure data driven decision on how we couldn't use it does.
Oh, good we're encouraged that the overall population has a quite the robot.
Level of activity, but we're also encouraged that there is a potential strategy here to improve patient outcomes scored though by selecting patients and this we've always said the totality yet we were away.
Anna Protopapas: Yeah, so. Boris, we have already answered this question in the past. I think the data will tell us what the overall durability of the response will be. As of ESMO, I think we were still gathering data and sharing the data at the ESMO poster session. Your question is, how would the FDA look at the overall profile of the drug? I would maybe ask Chuck, who has a lot of experience with these types of FDA interactions and particularly with ovarian cancer drugs, to maybe share his comments with us. Sure, Anna, thank you.
Total datasets, which would be quite robust as you can appreciate given that by the end of this year, we could have this made us.
60 patients.
As many as 40 to 45.5 local consumption.
Great. Thank you very much for taking my questions.
Thank you. Our next question comes from Tom Shrader with BTI GE. Your line is open.
Hi, good morning, Congratulations on all the progress I wanted to ask kind of an open ended question on the Sting program had been a lot of these that people took into the clinic and then were.
Chuck Miller: So I can say that based on the discussions that we've had with investigators over the years and my own personal experience with the indication, it's clear to me that FDA looks at the totality of data and balances the risk-benefit. I can say that, having worked in ovarian cancer and in single-arm studies, I joined Mersana excited about the prospects of 1536, and I remain excited about those prospects. Okay, I guess the second question is, how important is the delta in terms of response rate between the NAPI-2B high and the NAPI-2B low, even if you move the actual cutoff threshold? How critical should the delta be?
Somewhat disappointing are there newer or a preclinical models, where you think you can differentiate yourself from some of the other approaches can you get excited that yours is better preclinically or will the real well, we really have to wait for clinical data just curious your thoughts on how much we could be convinced from a preclinical model.
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So Tony Thank you for the question, we're extremely excited about the data.
We have a.
Would they get us into the platform and I hope you'll go and enjoy the the web anymore, we're having but maybe Tim can call Mad dog why we're so excited about that.
Boris Peaker: I'm not sure I understand the question. No, no, I'm saying that if we look at the response rate in a NAPI2B low patient and a NAPI2B high patient, there's going to be some kind of a delta there. I believe it was about 6% or so in the prior update that you had.
Sure good.
Good morning, Tom.
Well as we mentioned you know we're disclosing data it said see.
But we think it's very exciting and does differentiate our steering a D.C. use from other approaches for innate immune activation. So I don't want to steal our thunder from Sisi, but Oh I would direct you to.
Anna Protopapas: I'm curious how important it is to have a high difference in response rates between NAPI2B low and NAPI2B high patients. So we are encouraged by both the overall response, the response rate in the overall population, but we are also looking at, you know, the response rate in the subgroup. Our objective is really to look at the totality of the data and really understand as best as we can how selection of patients impacts patient outcomes. So beyond the overall response rate, we're seeing some trends where the biomarker has an impact on other important patient outcomes. And our objective is, by the time we launch the registration enabling studies, really to understand and define how we will use patient selection to improve patient outcomes. So there is a possibility we would look at the total population and use the diagnostic as complementary diagnostics.
That poster and also to our weapon or next week. If you can join US we'll get into those details I will say that preclinically. We're very excited about the data that weve already disclosed including at HCR earlier. This year that shows you know very robust activity after a single dose.
At quite you know relatively low levels, including innate immune memory, such that re challenge the tumors do not re grow and we've seen that not only against one target, but we've seen that again multiple target. So preclinically I think or data holds up very well.
And we very much look forward to sharing more details at cincy. Another Webinars next week.
All right fair enough. Thank you.
Thank you. Our next question comes from Jessica Fye with JP Morgan Your line is open.
Hi, This is Daniel it's interesting to find thanks for taking your question first one from me would be the press release and Oh. That's you have a phone in the prepared remarks that you continue to dose escalate and she 90 twos and how you're proceeding to higher doses.
Anna Protopapas: There's also the possibility that we will select patients for the registration trial and use the diagnostic as a companion diagnostic. I think we need to continue to look at the totality of the data and make the best data-driven decision on how we're going to use the diagnostic. We're encouraged that the overall population has a pretty robust level of activity, but we're also encouraged that there is a potential strategy here to improve patient outcomes further by selecting patients. And as we've always said, the totality, we were aware of the total data set, which will be quite robust, as you can appreciate, given that by the end of this year, we could have as many as 60 patients and as many as 40 to 45 valuable patients. Great, thank you very much for taking my call.
What is going to change over the next two months that prevents you from outlining did I disclose your plans today or at a year or a year and hours today.
Just to make sure I understand the question can you Youre asking why were not outlining a plan to disclose data now we would be waiting to around year end is that the question.
Now or year end instead of early January 2021 for 15 19 too.
Well as you know we use we and many other biotech companies outline our goals for the year a route youre, calling for it a J.P. Morgan, which this year will be a will be virtual I understand so its typical for companies to outline.
Boris Peaker: Thank you. Our next question comes from Tom Schrader with BTIG. Your line is open. Good morning.
Tom Schrader: Congratulations on all the progress. I wanted to ask kind of an open-ended question about the STING program. There have been a lot of these that people took into the clinic and then were somewhat disappointing. Are there newer or preclinical models where you think you can differentiate yourself from some of the other approaches?
Their goals at that time.
We already doses can they should every dose cohorts gives us more it could make sure about the profile of the drug.
Doug gives us more information as to how close we might be to web T.D.
So not the two month, two and a half months will give us that much more information and we'll be able to get a good.
Tim Leunger: Can you get excited that yours is better preclinically, or will we really have to wait for clinical data? I was just curious about your thoughts on how much we could be convinced from a preclinical model. So, Tom, thank you for the question. We're extremely excited with the data we have with the Immunosynthren platform. And I hope you're going to join us for the webinar we're having now, but maybe Tim can comment on why we're so excited about it. Sure. Good morning, Tom.
<unk> form as we lay out our disclosure cuts for 2012 you want.
Got it Okay, and then maybe a second question.
It's like the European sites have led to a pickup of enrollment for cutting 36 in lung cancer.
Have the U.S. sites picked up in terms of enrollment as well or is there something about the treatment paradigms in terms of talking to physicians want to turn into a meter long line cancer in Europe versus the U.S.
Tim Leunger: Well, as we mentioned, we're disclosing data at CIDC that we think is very exciting and does differentiate our STING ADCs from other approaches for innate immune activation. So, I don't want to steal our thunder from CIDC, but I would direct you to that poster and also to our webinar next week. If you can join us, we'll get into those details. But, preclinically, we're very excited about the data that we've already disclosed, including at AACR earlier this year that shows, you know, very robust activity after a single dose, at relatively low levels, including innate immune memory, such that re-challenged tumors do not regrow. And we've seen that not only against one target, but against multiple targets.
So let me clarify the sites international sites or in Australia, and Canada dozens were sites that will climb to go one night back in March.
Late because of cold, but I think we've seen a pickup across the board in all oxide, but having the too big to international a.
Sites online has just given them, but keep in mind that extra.
Okay, which would be twit, well, there's nothing nothing.
Nothing other than the number of sites that.
Ah impacting closer to enroll but.
Okay and last one I mean, a financial question with increasing number of pipeline products now expected to enter the clinic and are entering the clinic, how should we think about expenses to round out the year and into 2021.
Tim Leunger: So pre-clinically, I think our data holds up very well, and we very much look forward to sharing more details at FITC and at the webinar next week. All right, fair enough. Thank you. Thank you. Our next question comes from Jessica Fye with J.P. Morgan. Your line is open. Hi, this is Daniel for Jessica Five.
Brian.
Sure. So I think weve reiterated on this call that our current cash position of 271 million.
Provides us more than two years runway on our current operating plan. You know we also have a line of credit that we can pull down but I think you see.
Jessica Fye: Thanks for taking our questions. The first one from you would be the press release, and as you have outlined in the prepared remarks, you'll continue to dose Escalade 1592 and that you're proceeding to higher doses. What is going to change over the next two months that prevents you from outlining data disclosure plans today or out of your year-end hours? Just to make sure I understand the question, you're asking why we're not outlining plans to disclose data now when we would be waiting around year-end? Is that the question?
Pretty disciplined capital allocation over the previous quarters, and we're very careful to show you.
Our earnings release is what our cash used in operations is each each quarter and that can give you an idea.
Where we stand and as we embark upon.
A registration study and preparing for a B.L.A.
I think that's reasonable assumptions can can put you in the ballpark of where we expect that cash used in operations to be in the future.
Anna Protopapas: Now or year end instead of early January 2021, 4-15-19. Well, as you know, we and many other biotech companies outline our goals for the year around your conference at J.P. Morgan, which this year will be virtual, I understand. So it's typical for companies to outline their goals at that time. We are in dose escalation. Every dose cohort gives us more information about the profile of the drug and gives us more information as to how close we might be to MTD. So another two months, two and a half months will give us that much more information, and we'll be able to get, be more informed as we lay out our disclosure plans for 2021. It sounds like the European sites have led to a pickup in enrolment for 1536 in lung cancer.
Okay. Thank you very much.
Great.
Thank you. Our next question comes from Michael Smith Fair to your line is open.
Hey, guys. Thanks for taking the question I just had a follow up on lung cancer and in particular 15 92. So you guys are still dose escalating here just curious if you can maybe talk about.
The doses, you're you're planning to test there and then how those can compare to 15 36.
I'm just wondering if you're maybe trying to get to a higher dose with 15 92 right.
Yeah. So we're we'll be obviously.
Obviously, you took three plus three design would be pushing to reach the maximum tolerated dose I think we we expect to launch we will be looking not only at the dose level, but also the exposure.
Preclinical data showed that the same dose we are getting higher exposure from 52. So we will be looking at what is the MTD how does that MPT compared with 50 36, what is the exposure of the TPP and how does that compare to the exposure.
Anna Protopapas: Have the US sites picked up in terms of enrolment as well, or is there something about the treatment paradigm in terms of what physicians want to turn into later lung cancer in Europe versus the US? So let me clarify. The sites, the international sites, are in Australia and Canada. These were sites that were planned to go online back in March and were delayed because of COVID-19.
15, 36, so all these.
Is it.
What the pieces of the probation as we assessed the clinical differentiation of 52 to over 50 36 will be look you've got the tolerability profile and comparing the two as well as the different dose levels.
Anna Protopapas: I think we've seen a pickup across the board in all our sites, but having the two international sites online has just given us that extra opportunity to enroll. There's nothing other than the number of sites that have been impacted positively are enrolled. And last one, maybe a financial question. With the increasing number of pipeline products now expected to enter the clinic and are entering the clinic, how should we think about expenses to round out the year in an independent way? Brian, Sure. So I think we reiterated on this call that our current cash position of $271 million provides us more than two years of runway on our current operating plan. We also have a line of credit that we can pull off.
So there's a lot to learn over the next few bugs on but on the comparison of the two.
Two molecules.
Got it thank you, but but you know it's a it could be very exciting if we can see the differentiation. We saw in preclinical model to the clinic with 52, because it isn't seed could be 36 already has a very exciting coke off.
Makes sense. Thank you.
Thank you I know currently showing no further questions at this time I'd like to turn the call back over to Hannah prototypes for closing remarks.
I want to thank everyone for joining us today.
Well Cup you joined he does something wed be bar, we will be having to talk about the mute since it and of course, they choose for details of our analyst and Investor day around a year and.
Brian C. DeSchuytner: But I think you've seen pretty disciplined capital allocation over the previous quarters, and we're very careful to show you in our earnings releases what our cash used in operations is each quarter. And that can give you an idea of where we stand. As we embark on a registration study and prepare for a BLA, I think that reasonable assumptions can put you in the ballpark of where we expect that cash used in operations to be in the future.
Thanks again.
Ladies and gentlemen, this was in today's conference call. Thank you for participating you may now disconnect.
[music].
Brian C. DeSchuytner: Thank you very much. Thank you. Our next question comes from Mike Oles with Bayer Cheerland.
Michael Werner Schmidt: Hey guys, thanks for taking the question. I just had a follow-up on lung cancer, and in particular 1592. So you guys are still dose escalating here.
Anna Protopapas: Just curious if you can maybe talk about the doses you're planning to test there and then how those compare to 1536. I was wondering if you're maybe trying to get to a higher dose with 1592? Yeah, so we will be, obviously, the 3 plus 3 design will be pushing to reach the maximum tolerated dose. I think we expect to look not only at the dose level but also the exposure. Preclinical data has shown that at the same dose, we're getting higher exposure from 1592. So we will be looking at what the MTD is, how does that MTD compare with 1536, what is the exposure at the MTD, and how does that compare to the exposure from 1536. So all these are important pieces of information as we assess the clinical differentiation of 1592 over 1536.
Anna Protopapas: We'll be looking at the tolerability profile and comparing the two as well at different dose levels. So there's a lot to learn over the next few months on the comparison of the two molecules. Got it. Thank you. But it could be very exciting if we can see the differentiation we saw in pre-clinical models in the clinic with 1592 because, as you've seen, 1536 already has a very exciting profile.
Michael Werner Schmidt: Thank you. Thank you, and I'm currently showing no further questions at this time. I'd like to turn the call back over to Anna Protopapas for her closing remarks. I just want to thank everyone for joining us today. I welcome you joining us for the webinar. We will be having to talk about immunosynthesis. And, of course, stay tuned for details of our Analyst and Investor Day around year end. Thanks again. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.