Participants

Jason Fredette; Senior Vice President, Investor Relations & Corporate Communications; Mersana Therapeutics Inc

Martin Huber; President, Chief Executive Officer, Director; Mersana Therapeutics Inc

Brian Deschuytner; Chief Financial Officer, Chief Operating Officer, Senior Vice President; Mersana Therapeutics Inc

Yen-Der Li; Analyst; Leerink Partners

Charles Zhu; Analyst; LifeSci Capital

Paul Jeng; Analyst; Guggenheim Partners

Andy Hsieh; Analyst; William Blair

Asthika Goonewardene; Analyst; Truist Securities

Nick Thillman; Analyst; Robert W. Baird

Jeet Mukherjee; Analyst; BTIG

Presentation

Operator

Good morning, and welcome to Mersana Therapeutics fourth quarter and year end 2024 conference call. Currently, all participants are in a listen-only mode. There will be a question-and-answer session at the end of this call.
I would now like to turn the conference over to Jason Fredette, Senior Vice President, Investor Relations & Corporate Communications. Please proceed.

Jason Fredette

Thank you, operator, and good morning, everyone. Before we begin, please note that this call will contain forward-looking statements within the meaning of federal securities laws. These statements may include, but are not limited to, those related to the potential clinical benefits of our product candidates and platforms, our clinical trial progress and designs, dosing and patient management strategies, addressable market opportunities, anticipated milestones and data disclosures, and cash runway.
Each of these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. These risks and uncertainties are discussed in our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 13, 2024, and in subsequent SEC filings. Our filings are available at sec.gov and on our website, mersana.com. Except as required by law, we assume no obligation to update forward-looking statements publicly even if new information becomes available in the future.
On today's call, we have Mersana's Chief Executive Officer, Dr. Marty Huber; and our Chief Operating Officer and Chief Financial Officer, Brian DeSchuytner.
With that, let me turn the call over to Marty to begin the discussion.

Martin Huber

Thank you, Jason, and good morning, everyone. Over the past several months, we have accomplished a great deal here at Mersana. Most notably, with our lead dolasynthen ADC, Emi-Le, we reported positive initial clinical data, started the expansion portion of our Phase 1 trial and were granted an additional fast track designation for a growing portion of the breast cancer population that has previously been treated with a topoisomerase-1 inhibitor or topo-1 ADC. At the same time, we advanced Phase 1 dose escalation with XMT-2056, our lead immunosynthen ADC, while also supporting our collaborators.
Let's focus first on Emi-Le, Mersana's ADC targeting B7H4. In January, we reported initial clinical data from 130 patients who were enrolled in dose escalation and backfill cohorts as of December 13, 2024, data cutoff. From a safety and tolerability standpoint, Emi-Le was observed to be highly differentiated within the ADC space. The most common treatment-related adverse events of any grade were transient increases in AST, generally asymptomatic and reversible proteinuria, generally low-grade nausea and low-grade fatigue. Importantly, unlike many other ADCs, we did not see dose limiting neutropenia, neuropathy, ocular toxicity, interstitial lung disease or thrombocytopenia.
This provides us with the confidence that Emi-Le could have an attractive monotherapy profile. Just as importantly, we believe it also could enable combinations with standards of care like platinum chemotherapy and other ADCs that our competitors would be challenged to pursue.
From a clinical activity standpoint, confirmed objective responses were observed in all enrolled tumor types. These included patients with triple negative and hormone-receptor-positive breast cancer, endometrial cancer, ovarian cancer and adenoid cystic carcinoma type 1, otherwise known as ACC-1. At intermediate doses, which range from about 38 to 67 milligrams per meter square or about 1 to 2 milligrams per kilogram, the confirmed objective response rate was 23% across all tumor types, with high B7H4 expression, which we defined as an IHC score of 70% or more.
Focusing specifically on the evaluable patients in this dose range with B7H4 high triple-negative breast cancer, the confirmed ORR was also 23%. At the end of 2024, we initiated the expansion portion of our trial in patients with TNBC who have previously been treated with at least one topo and one ADC, a population with a very high unmet need.
We believe we are positioned for success for a few key reasons. The first is the dose we're utilizing. The second is our inclusion criteria. Third is the standard-of-care for these patients today. And the final factor is the competitive environment in which we are operating.
Let's begin with the dose. Generally speaking, as you might expect, we have seen that clinical activity tends to increase along with Emi-Le's dose. As I mentioned, the 23% ORR we observed was generated across a range of doses from about 38 to 67 milligrams per meter square. We have brought the top dose from this range, specifically 67.4 milligram per meter square every four weeks into expansion. As we previously reported, this particular dose was well tolerated. Additionally, each of the four B7H4 high patients who received this dose achieved target lesion reductions, and each also remained on treatment for durations of approximately 16 weeks or more as of the data of cut off.
A second factor that can influence response is prior treatment. This is well established in oncology and specifically in triple negative breast cancer. As a reminder, the 23% ORR that we observed with Emi-Le and TNBC was generated in a population of 13 evaluable patients. 12 of these patients received more than three lines of prior therapy, and all had received at least one topo-1 ADC.
These data compare favorably to historical benchmarks. For instance, a 23% ORR was also seen with Trodelvy and TNBC patients who received more than three prior lines of therapy in the Phase 3 ASCENT study. But of course, this was in a total naive setting. Trodelvy's ORR increased to nearly 40% in patients received only two or three prior lines of therapy. In expansion, we are limiting enrollment to patients with a maximum of four prior lines while also mandating that, at least, one prior treatment must have been a topo-1 ADC. It is also important to keep in mind what the standard-of-care is in TNBC today. In a cent, the control arm, which was single agent chemo, had an ORR of only about 5%.
And finally, there is the competitive environment. We view recent developments within the B7H4 ADC landscape as favorable for Emi-Le. Most notably, the company that we have viewed as our primary would-be competitor within the breast cancer space, Pfizer, recently announced that it had discontinued the development of its B7H4 ADC candidate. The other B7H4 ADCs that are at a similar stage of clinical development as us all have topo-1 payloads.
As a result, unlike Emi-Le, we believe they are subject to topo-1 resistance mechanisms. In fact, some of these companies appear to be excluding patients who have received prior topo-1 therapies from their clinical trials. This positions Emi-Le as the most advanced auristatin ADC in the class, which provides us with a significant opportunity in breast cancer. We are pleased with the level of investigator interest and engagement we are seeing. And while TNBC is our immediate focus, given the clinical activity we have seen across all tumor types, we are excited by Emi-Le's potential in other indications as well.
And so enrollment continues at our initial expansion dose of 67.4 milligrams per meter square. We're also continuing to investigate doses up to 95 milligrams per meter square in escalation of backfill cohorts, delays. We're pleased to report that we officially amended our clinical trial protocol in late January as we seek to mitigate the proteinuria-related dose that we were seeing at high doses. We expect these efforts will help us identify a second dose for our second expansion cohort in post-topo-1 TNBC later this year, and we plan to present additional data from dose escalation and backfill later this year as well.
Moving on to other areas, we also have advanced the dose escalation portion of our Phase 1 clinical trial of XMT-2056 in recent months. 2056 is our immunosynthen STING agonist ADC targeting a novel epitope of HER2. Later in 2025, we plan to present initial pharmacodynamic data from this clinical trial that helps to characterize this candidate's ability to selectively activate the STING pathway in HER2 expressing tumors.
And finally, I would like to note that we continue to make solid progress in our dolasynthen research collaboration with J&J and our immunosynthen research collaboration with Merck KGaA.
With that, let's turn things over to Brian for some color on our financials.

Brian Deschuytner

Thank you, Marty. Beginning with our balance sheet, we ended 2024 with $134.6 million in cash, cash equivalents and marketable securities. We continue to expect that our capital resources will support our current operating plan commitments into 2026. Please note that our cash runway guidance does not assume any future milestone payments that we may earn from our current collaborations or proceeds that we may realize from future collaborations.
Net cash used in operating activities for the fourth quarter of 2024 was $19.3 million, which is down significantly from $32 million in net cash used in operating activities during the year ago quarter. This decrease primarily reflects our portfolio reprioritization efforts, including the OpEx reductions we implemented in the second half of 2023 as part of our restructuring.
Turning to our income statement, collaboration revenue for the fourth quarter of 2024 was $16.4 million compared to $10.7 million for the same period in 2023. The year-over-year change was primarily related to increased collaboration revenue recognized under our agreements with J&J, Merck KGaA and GSK.
Research & development expenses for the fourth quarter of 2024 were $22.3 million compared to $21.5 million for the same period in 2023. For the most recent quarter, approximately $1.7 million of this spending was related to non-cash stock-based compensation. The year-over-year change was primarily related to increased costs associated with manufacturing and clinical development activities for Emi-Le and XMT-2056, which were partially offset by reduced costs related to clinical development activities for a discontinued candidate operate.
General & administrative expenses for the fourth quarter of 2024 declined to $8.9 million compared to $10.1 million during the same period in 2023. Approximately $1.7 million in non-cash stock-based compensation expenses were included in G&A for the most recent quarter. The year-over-year decline was primarily related to reduced employee compensation expenses following our restructuring in 2023 and reduced consulting and professional services fees. And finally, Mersana's net loss for the fourth quarter of 2024 was $14.1 million compared to a net loss of $19.5 million for the same period in 2023.
That concludes our business update. Operator, would you please open the call to questions from the audience?

Question and Answer Session

Operator

We will now begin the question-and-answer session. (Operator Instructions) Jonathan Chang, Leerink Partners.

Yen-Der Li

Hi. This is Yen-Der Li for Jonathan Chang. So the first question I have is that, could you share the latest progress on how you are mitigating the AST [LT] elevation and proteinuria issue related to Emi-Le? And how do you think that might increase your confidence in maintaining the dose intensity at a higher dose level?

Martin Huber

Thank you for the question. I'll start with the AST then going to the proteinuria and then get to your last question. So with regards to AST, AST does not result in meaningful amounts of dose delays. And even if a patient does have a delay, it's only about a week. So at this point in time, AST is a transient-reversible phenomena that is not having a meaningful impact on our ability to deliver dose.
With regards to proteinuria, just to reiterate, that is primarily a challenge or leading to dose delays only at the highest dose range. So what we're currently doing is, as we mentioned, we've had an amendment to the protocol which does several things. One, it puts in place mitigation such as ACE inhibitors and ARBs early in a kind of a prophylactic manner to minimize the development of proteinuria.
But importantly, as in the setting of when proteinuria does occur but it is asymptomatic, in that a patient is not having oedema, they're not having any serum hypoalbuminemia or serum creatinine changes, for those patients, we're able to maintain dosing by doing a dose reduction as opposed to a dose delay. So we look forward to testing that in the clinic to show that we are able to maintain dose intensity, but the clinical outcome will -- we're doing the experiment now.

Yen-Der Li

Just a quick follow up on the proteinuria. I think on the [separate code], you did mention that it was related to podocytopathy. And do you think that's caused by B7H4 on target or off-target effect? Just curious about the mechanism.

Martin Huber

At this point in time, we believe it is off target. Other auristatin payloads that are not for B7H4 have been observed to have albuminuria, the same type of podocyte effect.

Operator

Charles Zhu, LifeSci Capital.

Charles Zhu

Thanks for taking our questions, for the call and hope everyone had a great weekend. Regarding your dose expansion criteria of having patients with one to four prior lines of therapy, what's your sense of the distribution of patients that you might be getting that has fewer, call it, one to two as opposed to more, call it, three to four prior lines of therapy?

Martin Huber

I think it's too early to get that read. I mean, we opened it in the study and we're still gathering data. So I think, it would be premature for me to give guidance on what we think are the lines that are actually going to be in the population. One thing we can clearly say is, for inclusion exclusion criteria, those patients who had previously been on with five, six or seven are excluded from expansion. So at a minimum, it will ensure that patients don't have more than four prior lines. That is part of the protocol.

Charles Zhu

Maybe one quick follow up right now. I guess then, I think you went through this a little bit as well, but to what extent will your second dose, your second go forward dose, the identification of that be dependent on your ability to mitigate proteinuria? So you've already selected 67.3 in the intermediate range. And is there a scenario where you go for something, let's call it, in the middle to the higher end of your high dose range if your proteinuria mitigation works very well? Or is there an alternative scenario where you could end up maybe selecting even a separate dose beyond that?

Martin Huber

At this point in time, we are setting doses up to 95 milligrams per meter square. So we are not exploring anything higher than that at this point in time.

Operator

(Operator Instructions) Michael Schmidt, Guggenheim.

Paul Jeng

This is Paul on for Michael. I wanted to expand a bit on how you're currently thinking about establishing the final biomarker cutoff. Is it reasonable to expect where you land on TPS score to still capture roughly half of the TNBC population? Or could there still be a meaningful swing factor in how you're thinking about B7H4 high?

Martin Huber

I think while we continue to explore it, I would be surprised if it's outside of that 40%, plus or minus. 40% to 50% at the upper limit is most likely where we'll end up. To me, it would be very surprising if we end up with more than 50% or substantially less than 40%. (multiple speakers) For proportion of the population, the TPS score could be -- that's TBD, but the actual percent TPS to proportion score number.

Paul Jeng

And then just as a follow up, can you set some expectations for the updated Phase 1 dose escalation and backfill data later this year? Which dose levels are in focus for enrollment? How many additional patients of data can we potentially see? And what's the sort of gating factor for when you'll be ready to provide that update?

Jason Fredette

This is Jason. We haven't defined that. What we've said is we plan to present additional escalation and backfill data later on this year. As Marty alluded to, we're looking at doses up to 95 milligrams per meter square, but we haven't defined how much incremental data would be in that readout.

Operator

Andy Hsieh, William Blair.

Andy Hsieh

Just one quick one for us. Just looking at the updated deck, I think the only thing that changed is the competitive landscape. Marty, I think you've mentioned a little bit in your prepared remarks about the evolving competitive landscape, but I'm curious if you can kind of dive in deeper about some of the competitors that went to Phase 3 and dropped out. Just hoping to hear a little bit more from you.

Martin Huber

I'm going to let Brian give you a more detailed answer on that one.

Brian Deschuytner

Yes. As Marty articulated, we believe that Emi-Le is very well positioned in the B7H4 space. As you noted with the departure of one of our competitors, we're the most advanced auristatin B7H4 development. We're the only company that has shared initial positive efficacy data in our post-topo breast cancer setting.
As you remark, one competitor is moving into pivotal studies in a gynecologic tumor. I think we feel like this is very encouraging because it's an additional validation that you can see meaningful activity on that target, but several -- topo competitors are very much focused on on ovarian and endometrial at this stage.
So we believe, one, in Emi-Le's potential as monotherapy. We also believe that our safety and tolerability profile may afford us an opportunity to combine with things like platinum chemo and other ADCs. And we think long term as a set of development opportunities, some of our competitors might be very challenged to pursue those combinations. And so, I think, as we look at the overall competitive landscape, we view it very favorably.

Operator

Asthika Goonewardene, Truist.

Asthika Goonewardene

Two quick ones, if I may. Could you give us a little bit of clarity on when we could expect some of the expansion cohort data up to 67 milligrams? And then, when you presented the data early this year, we looked at three different intervals, the Q3, the Q4 and then a 2 on 2 off. I'm curious if you're looking at other intervals, maybe like a 3 on 1 off or any other types of other formats as well just to kind of set of the clutch on the dosing.

Martin Huber

It's Marty. I'll answer the second one first. At this point in time, we are not studying any schedules beyond what we previously shared. We are continuing to explore different schedules at this point in time, but they're limited to the three we've already shared. And with regards to expansion, we are not giving any further details on timing of expansion other than to say that we are continuing to enroll patients and investigators remain enthusiastic about the study.

Operator

Colleen Kusy, Baird.

Nick Thillman

This is Nick on for Colleen. So for XMT-2056, just wanted to ask what you have to show on the PD update and if there's a ballpark on how many patients or how much follow up you might have. And if we might see any early efficacy data at that time as well.

Martin Huber

We're not going into any detail beyond the fact that our primary objective will be to share pharmacodynamic data, showing that we're getting activation of the same pathway in HER2 positive tumors as far as any other details, we're not sharing at this point in time.

Operator

(Operator Instructions) Justin Zelin, BTIG.

Jeet Mukherjee

This is Jeet for Justin. I believe you had said you're going up to 95 milligrams per meter square, but I do believe there was 115 milligrams dose. Was there any reason why 115 milligrams isn't being explored further? And will we see a meaningful number of patients with proteinuria mitigation as part of this year's update?

Martin Huber

Well, first of all, we are not studying 115 milligrams any further. At the 115 milligrams dose, we did observe -- we saw it was reversible, but we did see grade 3 ASC in two of the three patients. And while we could have potentially explored that further, we made the decision that we were not going to because we were getting the exposures we were targeting at 95 milligrams and below. So our focus has been on a cap of the 95 milligrams every four weeks or the variations of that.

Jason Fredette

And on the second question in terms of again the additional escalation and backfill data, what we'll show is somewhat time dependent, right, in terms of when we plan to share data, so we're not providing any additional specifics at this stage.

Jeet Mukherjee

And maybe a follow up, with the Pfizer program now discontinued, have you spoken to any KOLs who have been on both the Pfizer study as well as yours? And if so, how do they compare the two agents so far?

Martin Huber

Well, they're not going to give us details of confidential data from Pfizer. I think the main thing has been, at this point in time, we had already heard from the investigators in the KOLs that Pfizer was not going to pursue their B7H4 in TNBC post-topo. That was known even before they discontinued the program overall.
And so we were being approached by investigators to participate in our study because when they heard through the grapevine, to be frank, even before our data was disclosed because we meet with these investigators, we have them under CDAs, they looked at our data as a promising opportunity and TNBC post-topo. And to be frank, it was the only game in town for their patients. So that's why we had several of those sites actively decide to join our study.
As far as the actual data that Pfizer had in this population, they did not share that with this other than -- once again, other than the state that Pfizer was not pursuing this indication.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to CEO, Dr. Marty Huber, for any closing remarks.

Martin Huber

Thank you, operator, and thanks, everyone, for dialing in. We'll look forward to seeing many of you at the TD Cowen Healthcare Conference here in Boston tomorrow, as well as at Leerink's Healthcare Conference in Miami next week. That concludes our call, operator. Thank you.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.