Mersana Therapeutics, Inc.

Good morning and welcome to the Mursana Therapeutics first quarter 2025 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 call over to Mr. Jason Fredette, Senior Vice President, Investor Relations and Corporate Communications. Please proceed, sir.

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 design, addressable market opportunities, anticipated clinical milestones and data presentations, and cash runways. Each of these forward-looking statements is 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 March 3, 2025, and in subsequent SEC filings. Our filings are available at sec.gov and on our website, mursana.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 Marsana's Chief Executive Officer, Dr. Marty Huber, and our Chief Operating Officer and Chief Financial Officer, Brian DeSchuttner. With that, let me turn the call over to Marty to begin the discussion. Thank you, Jason, and good morning, everyone.

Let's begin by touching on last week's announcement of MRSANA's strategic restructuring and reprioritization plan. This plan includes several cost-savings initiatives. Among them are the reduction of about 55% of our workforce across functions, the elimination of our internal pipeline development efforts, a reduction of other research activities, and a narrowing of our clinical development work with Emily to focus on breast cancer. We will continue supporting Phase I dose escalation work for XMT 2056 and our ongoing collaborations our main objective however was to extend our cash runway into mid-2026 to give us the opportunity to generate important objective response rate and durability data for emily from both of our ongoing phase one dose extension cohorts many of our colleagues learned last week that they will be departing mersana today and others will be leaving in the near term i would like to take a moment to thank them for all they have contributed to our programs, and our patient-centric culture. Now let's move on to a very timely topic. Early this morning at the ESMO Breast Cancer 2025 Congress in Munich, Dr. Erica Hamilton, who heads up breast cancer research at the Sarah Cannon Research Institute, presented updated clinical data for EMILY, our dolosynthin B7H4 ADC. The presentation primarily focused on preliminary time-to-event data from patients with triple negative breast cancer, or TNBC, who are enrolled in our dose escalation and backfill cohorts. Safety and tolerability data in this population remained consistent with those previously reported, with no new safety signals. Now, before getting into the clinical activity data, it may be helpful to share a little context up front. First, it's worth noting that research has shown B7H4 expression is a negative prognostic factor in various cancers, including in TNBC. In other words, clinical outcomes in patients with higher B7H4 expression are generally worse than those for patients with lower expression. Additionally, it is helpful to know what the performance is for today's standard of care in late-line TNBC, namely single-agent chemotherapy. A key reference for this is ASCENT, Tridelby's registrational trial in relapsed and refractory TMDC. In that trial, patients receiving chemotherapy achieved an objective response rate, or ORR, of only 5%. The median progression-free survival, or PFS, was about 7 weeks, and median overall survival, or OS, was about 7 months. Those data were from patients who were naive to Topo1 ADCs. Ultimately, we believe that this is the type of time-to-event data that a new agent would need to beat in a potential randomized pivotal trial in post-Topo1 TMBC for full approval. And given these low bars, we believe such a randomized trial would not take much longer than a single-arm trial. With that, let's briefly recap the clinical activity data presented this morning. The presentation focused on our valuable patients with TMBC who received intermediate doses of EMILY, ranging from about 38 milligrams per meter squared up to about 67 milligrams per meter squared. Importantly, more than 80% of these TMBC patients had received a prior TOPA-180C. Among those patients with B7H4 low tumors who received four or fewer prior lines of treatment, the ORR was 0%. The median PFS was 6.4 weeks and the median OS was 5.7 months. But among those patients with what we have initially characterized as B7H4 high tumors who received four or fewer prior lines of therapy, the ORR was 29%. The median PFS was 16 weeks and the median OS had not yet been reached as of the data cutoff of March 8th. As a reminder, our current dose expansion cohorts are only enrolling TMBC patients who receive four or fewer prior lines of therapy, including at least one prior TOCO-180C. While some patients with B7H4 low tumor expression are being enrolled, our primary focus is on the B7H4 high TMBC population. And so, While the sample size from dose escalation and backfill is small, today's presentation sheds further light on why we continue to believe EMILY could represent a meaningful improvement over today's standard of care for patients with post-TOPO1 TMBC. The ESMO breast presentation also contained an update on clinical activity observed across all tumor types in dose escalation and backfill cohorts as of that data cutoff of March 8th. Eight of 26 evaluable patients with B7H4 high tumor expression who received intermediate doses of Emily achieved a confirmed response for an ORR of 31%. This is an increase from the 23% ORR that was reported based upon our December 2024 data cutoff. Further details are contained in the ESMO breast presentation, which can be accessed on the publication sections of our website at mursana.com. We will be sharing some additional clinical data from dose escalation and backfill cohorts across all tumor types based on that March 8 beta cutoff in an oral presentation at ASCO in a couple weeks. So where do we stand with our expansion work with Emily? Well, we're making great progress. Again, in expansion, we are focusing on patients with TNBC who have received one to four prior lines of therapy, including at least one prior DOPA1 ADC. Enrollment in our initial expansion cohort that is receiving 67.4 milligrams per meter squared dose of Emily every four weeks has advanced rapidly in 2025. As a reminder, we amended our clinical trial protocol in the first quarter of this year with the goal of mitigating proteinuria-related dose delays we had seen at higher doses of Emily. These proteinuria management guidelines have now been adopted at our clinical sites. I'm also happy to share that we recently initiated and have progressed patient enrollment in our second TNVC expansion cohort. These patients are receiving a starting dose of 44.5 milligrams per meter squared of Emily on days one and eight of the first four-week cycle, followed by 80 milligrams per meter squared every four weeks. We chose this regimen for a few reasons. First, All four of the evaluable B7H4 high patients who received the 44.5 mg per meter squared day one, day eight dose every four weeks in dose escalation and backfill cohorts achieved tumor reductions of at least 30%. Second, we believe our recent protocol amendment will enable us to maintain dose intensity and tolerability for our 80 mg per meter squared Q4 dose. And third, our PK work showed that exposures for this regimen are distinct versus our 67 mg per meter squared every four-week dose, which we believe may be helpful in the spirit of Project Optimus. As we continue advancing our work in expansion, we are also witnessing a series of developments that could significantly expand the post-TOCO1 patient pool. Up until now, in the breast cancer space, topo 180Cs have only been approved for relapsed and refractory patients. But in recent months, there have been multiple positive phase 3 readouts for topos in the frontline setting. Focusing specifically on the TMBC, as we've noted before, global TMBC revenues for Tredelvi in 2025 are projected to exceed $1 billion. Just a few weeks ago, positive top-line results were shared from Ascent4, a clinical trial for the combination of Tredelvi and Keytruda in frontline TNBC. This readout may enable Tredelvi to become the new standard of care for first-line PD-L1 positive TNBC. And with results from the Phase III Ascent III trial in PD-L1 negative patients also expected in the weeks ahead, we believe the post-TOPO1 TNBC patient population could expand substantially. In summary, we remain excited about Marsana's prospects, we're making great progress with expansion enrollment, and we are looking forward to sharing initial clinical data from expansion in the second half of this year. With that, let's turn the call over to Brian for our financial review.

Thank you, Marty. Beginning with our balance sheet, we ended the first quarter of 2025 with $102.3 million in cash and cash equivalents. Due in part to the restructuring and reprioritization plan we announced last week, we expect that our capital resources will enable us to support our current operating plan commitments into mid-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 first quarter of 2025 is $29.3 million. Turning to our income statement, collaboration revenue for the first quarter of 2025 was $2.8 million, compared to $9.2 million for the same period in 2024. The year-over-year change was primarily related to reduced revenue recognized under our collaboration and license agreements with J&J and Merck KJA. Research and development expenses for the first quarter of 2025 were $18.3 million, compared to $18.7 million for the same period in 2024. For the most recent quarter, approximately $1.4 million of this spending was related to non-cash stock-based compensation. The year-over-year change was primarily related to our lower headcount and related employee compensation costs, partially offset by an increase in costs related to MLE clinical development activities. General and administrative expenses for the first quarter of 2025 declined to $8.9 million compared to $11.6 million during the same period in 2024. Approximately $1.3 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 a reduction in consulting and professional services fees, as well as the company's lower headcount and related employee compensation costs. And finally, Mursana's net loss for the first quarter of 2025 was $24.1 million, compared to a net loss of $19.3 million for the same period in 2024. That concludes our business update. of questions from the audience.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Tara Bancroft with TD Cowan. Please go ahead.

Hi, good morning, and thanks for taking the questions. So I was hoping that you could expand a little bit more, even qualitatively, on the high dose, especially regarding safety and the updated protocol. I know you mentioned that the PK profiles were pretty distinct, but I'd love to hear more about that. And if an update here will be included in the ASCO update at all. Thanks so much.

Thanks, Sarah. Well, just the last one first. This is part of the second dose level, the 44.5, is part of expansion. And just to be clear, the data we are sharing at ASCO is based on escalation and backfill only. There is not going to be expansion data at ASCO. So these data would not be included in that presentation. With regards to the rationale, I think I'm going to work backwards to the PK. One of the things you want to look for when you study a second dose is make sure that from an exposure point of view, it's a discrete dose level and it's not overlapping. In other words, it needs to be a meaningfully higher dose. Because if you think about the Project Optimist project, if you have two doses that are 80% of the patients are overlapping in exposure, it's really not a second dose. So, we were looking for a dose that is meaningfully higher. than 67 Q4. So the dose we're putting forward at 44.5 day 1 to 8 followed by 80 is a meaningfully higher exposure than you achieve with 67. And then the final part of why we believe it's doable is when we evaluated our data, one of the observations we found is the 44.5 day 1 to 8 was the most effective dose in ensuring a tumor reduction at week six. So it clearly had, I mean, I said four out of four patients who were B7H4 high with measurable tumor at the baseline who got that dose week six. The problem we had with 44.5 was the proteinuria also resulted in patients interrupting treatment. So now we believe with the proteinuria mitigation efforts in place that we will be able to maintain it. Now, the question then is, well, why did you go from a day one, day eight to then an 80? Well, an 80 is also a meaningfully higher exposure, but fundamentally you do run into a problem of trying to do a day one, day eight, and maintaining that every cycle just gets to be challenging, whereas 80 every four weeks gives you an exposure in the ballpark of 45 day one, day eight. But it's a much, you know, when we talk to our investigators, there was a lot of negative feedback about trying to maintain a day one, day eight schedule on an ongoing basis. But we did think it's worth it trying to get it in for that, or getting it into that first cycle, because that really is our best shot at efficacy.

Okay, great. Thank you so much. The next question will come from Charles Zhu with LifeSci Capital. Please go ahead.

Hey, good morning, everyone. Thanks for taking the questions. Congrats on the progress and nice to see some of these response rates ticking upwards a bit. I have a question regarding maybe some of the Ascent 3 and Ascent 4, you know, studies, either having already read out or about to read out. How might these, you know, assuming Ascent 3 is also successful, you know, like a change standard of care and impact, if at all, your clinical development plans in the post-TOCO setting? And really what I'm getting at here is would you expect any sort of, like, you know, different patients based on characteristics or outcomes based on whether or not they get this new standard of care versus getting, you know, the prior slash current standard of care. Thank you.

Charles, maybe I'll take that one. As you know, our expansion cohort is exclusively looking at post-TOPO1 TNBC, and so I think While we certainly have activity, and we've shown this in the January data disclosure in non-topo pretreative patients, in the U.S. and in Western Europe, the penetration of these topo-delivering ADCs has been very, very rapid into the recurrent setting, as Marty noted in his remarks. I think what this provides the opportunity for is the earlier those agents are used, the more and more patients fall into this post-topo-1 situation. And we know that, very uniquely, we retain activity in that space. In fact, we've been deliberately studying that space because it's one of the highest unmet needs in breast cancer. What do you do once you've induced a resistance phenotype in a patient post-TOPO1? It's a serious question for many of the physicians. We have been uniquely in the space for B784 recruiting those types of patients to ask that hard question. And so we view this as a very positive development for patients and for the size of the opportunity that we're pursuing. Yeah, great.

Thank you.

The next question will come from Michael Schmidt with Guggenheim. Please go ahead.

Hey, good morning. Thanks for taking my questions. Yeah, maybe just a couple follow-ups. You know, again, nice to see these. additional two responses at the intermediate dose. Could you just comment on what types of patients those were? Were those two TNBC patients or perhaps some of the other histologies? And then, yeah, just curious if you could provide some qualitative perhaps comments on the impact of some of the protocol amendments that you've implemented to manage some of the proteinuria and prophylaxis, you know, how has that sort of, you know, what was the experience with that so far and has that indeed, you know, resulted in perhaps lowering proteinuria or, you know, delay some of these treatment holes? And then lastly, could you just give us a sense of enrollment at the 67 milligram cohort and how that's been progressing and how substantial this update in the second half later this year will be? Thanks so much.

I'm going to start work backwards. So on the 67 enrollment, we're not giving further guidance. I think what we, suffice it to say, we've seen sufficient enrollment that we felt comfortable issuing a new guidance. We kind of since we kind of run out of guidance for the year because we'd actually achieved all the stuff we said we were doing, so we decided that when we looked at our enrollment, we have enough patients that we felt confident we would have a data set. And one of the questions we want to do is make sure we have a data set that had enough durability because that's, as you all recall from our initial data set, that was one of the questions. So I think as far, we're not giving actual sample sizes yet, but I think the fact that we've, switched from 67 to the second dose should indicate, you know, we're doing fine on enrollment. And I think for any of you who happen to get up at 2 a.m. and listen to Erica's call and from, you know, our people on the ground in Munich have been telling us the investigator enthusiasm has been high, and we're seeing that in the enrollment. So I think this niche of post-topo now, we've clearly become If you have this trial available for your patients, you're putting your patients on it. So that's why I think we're comfortable putting out the new guidance for second half. With regards to the proteinuria, once again, we're not giving any data yet. And I think probably a couple things that are important to understand about that is the mitigations that we're doing, we do not anticipate them ever taking proteinuria to zero. So we want to be very clear. Our expectation is you're still going to see an AE of proteinuria in these patients. What this is about is managing the other consequences of avoiding the development of serum hypoalbuminemia changes in creatinine. And I think we're at the point now we're confident enough in our mitigation efforts that we are comfortable opening the expansion of at the new dose and regimen. We will, I mean, when we share the data on this dose in the second half, then we can get into more details of exactly what that looks like.

And the first question was the 31% ORR.

Oh, tumor types. Yeah, those both were ACC1s, but as far as the more details of that, in our upcoming ASCO presentation, whereas Esmo kind of covered the focused on TMBC, Erica is going to focus on the other tumor types, including the 31% at the ASCO presentation. And a few more things that we can't disclose yet on that data set.

All right. Thank you.

Again, if you have a question, please press star, then 1. Our next question will come from Jonathan Chang with Layering Partners. Please go ahead.

Hi, guys. Good morning. Thanks for taking my questions. First question, are there additional dosing regimens that could be further evaluated beyond dose A and B in the expansion, or have you settled on these two dose cohorts? And second question, can you help set expectations on the upcoming ASCO presentation? What could we learn at ASCO relative to the disclosure today? Thank you.

First of all, with regards to the doses, these are the two doses that we are taking into expansion. We do not anticipate any others. Obviously, we always, you know, we're data-driven if we learn something new from the data. But the go-forward plan is that it would be either of these two doses. And, in fact, that's one of the reasons we kind of scheduled on this kind of loading and switched to ADQ4, because we believe doing the loading for one cycle and then switching to ADQ4 is a viable solution. dose and schedule to take forward, assuming the data supports it. But we do not – we've obviously looked at other doses and schedules as part of our backfill, but at this point in time, we don't have any plans to take any of those forward. And with regards to the ASCO presentation, I think really probably knowing that companies have gotten in trouble for violating embargo, we don't – I mean, This is our first oral presentation as a company, and the last thing I would hate to do is be the guy who lost it because I blew an embargo. But the thing I think we can be very clear on to set expectations, this is the backfill and escalation data. There is not going to be expansion data at ASCO.

Understood. Thanks for taking the questions.

The next question will come from Colleen Cousy with Bayard. Please go ahead.

Hi, good morning. Congrats on all the progress and thanks for taking our questions. Marty, I think you mentioned something about a randomized phase three taking not much longer than a single arm. So could you just provide a little bit more color on what you're thinking on a potential pivotal study? And I would follow up, please.

I mean, a lot of people ask those questions of, is your response rate going to be high enough for an accelerated approval? And I think one of the things we're looking at, we think that's actually kind of an irrelevant question. Because fundamentally, if you can do a randomized trial in a similar timeframe as a non-randomized trial, that's always the better way to go. And I'll give you three reasons to that. One is from a regulatory point of view, and now you have to think beyond the U.S., on a global basis, a randomized trial you can file anywhere. A lot of companies have discovered you do these accelerated approval strategies and with a single arm trial, and then you can't go anywhere else. And then you're kind of stuck waiting for a randomized trial. The second point is, you still end up having to do the randomized confirmatory trial. And if that randomized confirmatory trial is not well underway or near complete, you can get in trouble of not getting an approval because you haven't progressed your confirmatory trial. And that's a point where the agency's gotten very, very sticky. They really, really want to know that You know, the definition of well underway is getting – they basically want to know your trial is going to read out before they approve you. And then the other area where it comes in, and this is one of the things we were very pleased with sharing at ESMO, is things like if you look at diseases like TNBC, post-topo especially, where patients are progressing in six weeks and dying in six months or less, is what's important for – physicians is to understand not only the response rate, but stable disease as well. In TNBC post-topo, a patient who doesn't progress in 18 weeks is deriving a meaningful benefit from the treatment, because we know the natural history of that patient is they progress in six weeks. And then finally, you can actually, in a randomized trial in TNBC, by the time you finish enrollment, you'll probably already have enough endpoints for PFS so you can basically complete your enrollment and almost turn around and look at your PFS endpoint the next day. And then your survival endpoint is literally coming in within months of that. So we think there's an opportunity with a randomized trial to avoid a confirmatory trial and get OS data, even if it's a secondary endpoint, rapidly. And then once you have that data set, We think that makes it, you know, all this churn you're seeing at the FDA about are they going to accept randomized trials or do they want placebo control? All that nonsense just goes away if you run a randomized trial because you're walking in with what everybody would agree is the gold standard of trials. Got it. That's super helpful. And just to be clear, we have not had any formal regulatory advice on this, but on that point I think, I would be shocked if the FDA wouldn't accept a randomized trial with, you know, PFS and OS as your endpoints.

Got it. Okay. Super helpful. And then in that context, can you just talk about the cutoff for B7H4 expression and how much additional work needs to be done before you feel like you can totally confirm that?

We're doing that work in expansion. When you switch to a pre-commercial assay, there were a few tweaks in the assay between escalation and backfill, and expansion. So in expansion, it is possible that the TPS score comes out to be a slightly different place. But I think what's important to understand is even if the TPS score shifts a little bit, we still fully anticipate that 40% to 50% of patients are going to be positive. So the actual score may change a little bit, but we would be surprised if the percent of patients who were positive dramatically changed.

And that's probably an important point as you think about the competitive landscape because people have different specifications around their research assays. The specification doesn't matter so much, the staining conditions, the staining time, the temperature. What you're looking for in B784 is about 40% to 50% of the population. And so regardless of how someone describes the conditions of their assay, they're likely identifying the same patients.

Got it. That's great. Thanks for taking our questions.

The next question will come from Andy Hasai with William Blair. Please go ahead.

Thanks for taking our questions. Two quick ones from us. One is about the post-topodynamic. I think at the conference, Dr. Talaney presented almost 200 patients' worth of data. showing similar PFS for the intermediate or after an intermediary chemo for topo-ADC to be challenged. And so that, you know, I guess from my perspective, suggesting a resistant phenotype is more longer term. I'm curious about your take on that data. And then secondarily, in the January update for the triple negative cohort, there were three patients with treatment ongoing. I'm just curious. March update. Thank you.

With regards to your first question, I'm not in Munich. I stayed behind because of the restructuring and the earnings. I want to be careful commenting on my presentation, which I did not see. I'll have to go back and look at that. We did have people on the ground. We'll find out from them. With regards to the details of the ongoing status, I think I would defer that, as I said, to the ASCO. We will be giving an update, the March update for all patients at the ASCO presentation, and I really don't want to front-run that.

The next question will come from Asika Gunawardine with Truist. Please go ahead.

Hi, this is Karina for . Thanks for taking my question. I had a follow-up on the B7H4 expression. What proportion of patients have B7H4 expression greater than 70? In your previous presentation, you had 40 out of 130 patients. So, should we assume around roughly 30% of the population?

I think we, for T and BC, we're comfortable that a number will be somewhere between 40 and 50% of the population.

Okay, so 40 to 50. And then also regarding this proteinuria medication strategy for the ACE inhibitor prophylaxis, is that initiated only once a patient exhibits signs of proteinuria or at a specific rate threshold?

In the new amendment that has now been adopted at most of the sites, you are encouraged to start that prophylactically prior, I mean, basically at the initiation of treatment unless the patient has a contraindication for the ACE or ARB.

Okay, thank you so much.

Again, if you have a question, please press star, then 1. Our next question will come from Jeet Mukherjee with BTIG. Please go ahead.

Hey, good morning, and thanks for taking the question. Maybe two quick questions from me. With the 67.4 and 44.5 MIG doses now moving forward in expansion, what would you ultimately want to see from a target product profile perspective to justify moving 44.5 over the other dose intended to pivotal studies? And just in terms of the expansion update later this year, will it be strictly in TNBC patients or Could we also expect to see, say, ovarian or endometrial patients for that update? Thanks.

With regards to your first question, I mean, if the efficacy for the higher dose is not meaningfully better than 67Q4, 67Q4 is the dose we would take forward. Because it's just, it is, the proteinuria is much less of an issue there. And it's just a fairly straightforward and easy regimen to do. The intent of the higher dose intensity up front is getting patients into response faster, which is important in a very aggressive disease like TMVC, especially these late-line post-OPO patients. With regards to the – your other question was – Just in terms of the extension. Yeah. And actually, this is – I'm glad you asked that because this is one of the areas I think we probably didn't – the impact of restructuring when people are saying, what did we stop doing as part of this? One of the things that we are not doing is we originally had planned to be starting multiple extensions across multiple tumor types. And so one of the reasons we can get by with a smaller organization is it's going to be a very breast cancer-focused expansion program. So the ovarian and endometrial data that we have already in backfill and escalation, that will be at the ASCO presentation, but there will not be in 2025 new expansion data beyond breast cancer. And that is just an unfortunate consequence of, you know, extending cash runway. But we still want to look at those two indications. It's just we had to prioritize at this point in time.

Thank you.

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

Thank you, Operator, and thanks, everyone, for dialing in. We'll look forward to seeing many of you in Chicago at ASCO in a couple weeks. That concludes our call. Thank you.

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