Mersana Therapeutics, Inc. (NASDAQ:MRSN) Q1 2024 Earnings Call Transcript May 9, 2024
Mersana Therapeutics, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Mersana Therapeutics First Quarter 2024 Conference Call and Webcast. Currently, all participants are in listen-only mode. There will be a question-and-answer session, at the end of this call. I would now like to turn the call over to Jason Fredette, Senior Vice President, Investor Relations and Corporate Communications. Please note, this call is being recorded.
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 our platforms, product candidates, business strategy, clinical trial execution and data, business development efforts 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 annual report on Form 10-K filed with the Securities and Exchange Commission on February 28, 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 the call today, we have Mersana's President and 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 our discussion.
Martin Huber: Thank you, Jason, and good morning, everyone. As most of you know, Mersana is an ADC innovator that's advancing product candidates based on its two proprietary platforms. The first of these is Dolasynthen, our next-generation cytotoxic ADC platform, and the second is Immunosynthen, a novel platform that utilizes a STING agonist payload. Let's begin today's call with a brief discussion of new insights about Dolasynthen that we recently shared at both ESGO and AACR. As many of you know, severe neutropenia, peripheral neuropathy and ocular toxicity have served as key limitations for today's leading ADC platforms. At those Congresses, we presented preclinical and clinical data that we believe demonstrates Dolasynthen's ability to significantly reduce these types of off-target platform related toxicities, as well as other presumed platform-related adverse events that we saw with our own first-generation ADC platform, Dolaflexin.
Ultimately, our goal is to reduce ADC platform toxicities to the greatest extent possible in order to both maximize monotherapy efficacy and open the door to combination approaches with other chemotherapy an ADC standards of care. That's something that simply isn't possible with many of today's approved ADCs. Now, let's move on to XMT-1660, our lead Dolasynthen ADC that targets B7-H4. We're in the midst of a Phase I clinical trial that's enrolling patients with solid tumors, including triple-negative and ER-positive breast cancer, ovarian cancer and endometrial cancers. B7-H4 is a member of the B7 family of immune checkpoint markers. The scientific literature suggests that B7-H4 is selectively expressed in tumors with limited healthy tissue expression.
Additionally, we have not seen any clear signs of on-target toxicities in the clinical data presented by our competitors. We believe B7-H4 selective expression and Dolasynthen's ability to reduce off-target platform toxicity have helped us continue advancing the dose escalation portion of our ongoing trial. We are now beyond the dose levels previously investigated clinically with either Dolasynthen or our first-generation platform and we still have not established a maximum tolerated dose for 1660. Based on preclinical models, we have identified exposure thresholds that we believe are key to clinical activity. We also have leveraged our clinical data for 1660 to identify doses and schedules that increase the time above this exposure threshold.
A biotechnologist in a lab coat closely observing a glass beaker of a newly formulated drug.
Additionally, based on emerging data in the B7-H4 space, we also are progressing our biomarker strategy in preparation for expansion and later stages of development. Given that a maximum tolerated dose has not yet been established and objective responses have been seen in this trial, we are continuing to advance dose escalation and backfill cohorts in parallel to optimize our dose, schedule and biomarker. We now expect to be in a position to announce our initial clinical data and initiate expansion in the second half of this year. All of this work is aimed at positioning XMT-1660 as a potential best-in-class asset and we are taking the time needed to accomplish our objective. Now let's shift to XMT-2056, which is the lead candidate we are developed utilizing Immunosynthen.
Our Immunosynthen platform is designed to deliver a 1-2 punch by activating STING in a target-dependent manner in both tumor cells and in tumor-resident myeloid cells. XMT-2056 is an ADC targeting a novel epitope of HER2 that's distinct from both pertuzumab and trastuzumab. o in addition to its potential as a monotherapy, we believe there may be a range of intriguing paths to pursue for combination treatments with 2056, including combos with other HER2-targeted agents. That said, our near-term goal is to advance the dose escalation portion of our Phase I clinical trial of 2056. Multiple clinical sites are now open and we're actively recruiting patients with a range of HER2-positive tumors, including breast, gastric, colorectal and non-small cell lung cancer.
In addition to these lead programs, we also continue making progress with the collaborations we have in place with Johnson & Johnson focusing on Dolasynthen ADC discovery efforts and with Merck KGaA for immunosynthen discovery efforts. With that, let's turn the call over to our Chief Operating and Financial Officer, Brian DeSchuytner to provide a financial update.
Brian DeSchuytner : Thank you, Marty. Let's get into the financial highlights for the first quarter of 2024, starting with our balance sheet. We ended the first quarter with $183.1 million in cash, cash equivalents and marketable securities. We continue to expect our available funds to support our operating plan commitments into 2026. Please note that our cash runway guidance does not assume any potential milestone payments from our current collaborations or proceeds that we may realize from future collaborations. Turning to the income statement. Collaboration revenue for the first quarter of 2024 was $9.2 million, compared to $7.8 million for the same period in 2023. The year-over-year change was primarily related to the timing of research and CMC activities for the Johnson & Johnson collaboration agreement.
Research and development expenses for the first quarter of 2024 declined significantly to $18.7 million, compared to $47.3 million for the same period in 2023. For the recent quarter, approximately $2.5 million of this spending was related to non-cash stock-based compensation. The year-over-year decline in R&D expenses was primarily related to reduced costs associated with manufacturing and clinical activities for UpRi and reduced employee compensation following the restructuring we announced in July of 2023. General and administrative expenses for the first quarter of 2024 declined significantly to $11.6 million, compared to $18.3 million during the same period in 2023, approximately $2.1 million in non-cash stock-based compensation expenses were included in G&A for the most recent quarter.
The year-over-year decline in G&A expenses was primarily related to reduced consulting and professional fees and reduced employee compensation expenses following our restructuring. Please note that this restructuring is now substantially complete with no meaningful costs incurred in Q1. And finally, Mersana's net loss for the first quarter of 2024 was $19.3 million, compared to a net loss of $56.2 million for the same period in 2023. That concludes our business update. Operator, would you please open the call to questions from the audience?
