Earlier this morning, Mersana Therapeutics' (MRSN) 5.0 million share IPO priced at $15, inline with the $14-$16 expected range, generating $75.0 million in gross proceeds. The IPO, which was led by JP Morgan, Cowen & Company, and Leerink Partners, is expected to open for trading later this morning on the Nasdaq.
MRSN is a clinical stage biopharmaceutical company focused on developing antibody drug conjugates (ADC). Its most advanced platform, Dolaflexin, has been used to generate a pipeline of proprietary ADC product candidates to address patient populations that are not currently amenable to treatment with traditional ADC-based therapies.
Its lead product candidate, XMT-1522, is a HER2-targeted ADC currently in a Phase 1 dose escalation study in primarily breast cancer patients, with interim safety results expected by the end of 2017. HER2 belongs to a family of signaling molecules that are highly and preferentially expressed on the surface of various cancer cells, and are known to play a role in promoting tumor cell growth. Upon the completion of dose escalation, the company plans to expand clinical development of XMT-1522 into additional breast cancer, non-small cell lung cancer (NSCLC), and gastric cancer patient populations.
Its second product candidate, XMT-1536, is a Dolaflexin ADC targeting NaPi2b-expressing tumors. NaPi2b is an antigen highly expressed in 60-90% of both non-squamous NSCLC and epithelial ovarian cancer. The company states that data from earlier clinical studies conducted by Roche’s (RHHBY) Genentech, with lifastuzumab vedotin, another NaPi2b targeting ADC, provide partial validation of NaPi2b as a target in these indications and form the basis of its rationale to advance XMT-1536 as a potentially clinically meaningful ADC for the treatment of these diseases. XMT-1536 is currently in Investigational New Drug Application enabling studies, and they expect it to enter clinical development in early 2018.
The company has a couple of key collaborations in place with large, global healthcare companies. In March 2014, the company entered into a research collaboration and commercial license agreement with Takeda through its wholly owned subsidiary Millennium Pharmaceuticals, a holder of more than 5% of MRSN’s capital stock, for the development and commercialization of ADC product candidates utilizing Fleximer. Through March 31, 2017, the company has received $24.8 mln in upfront payments and option fees under this agreement. If products are successfully developed and commercialized against all seven potential target antigens under this agreement, the company is entitled to receive future development, regulatory and commercial milestones of up to $1.063 bln and tiered royalties on net sales of products under this agreement.
Also, in June 2014, MRSN entered into a collaboration agreement with Merck KGaA for the development and commercialization of ADC product candidates utilizing Fleximer for up to six target antigens. Through March 31, 2017, the company has received an upfront payment of $12 mln and milestone payments of $2 mln under this agreement. If products are successfully developed and commercialized against all six target antigens, the company is entitled to receive future development, regulatory and commercial milestones of up to $778 mln.
For the three months ended March 31, MRSN reported a net loss of $8.06 million vs. $5.36 million in the prior year period as R&D expenses rose 36% to $10.1 mln. Collaboration revenues were $4.29 mln, up 16% y/y.
As of March 31, the company had $88.5 million in cash and cash equivalents. The company projects that based on its current operating plan, net proceeds from this offering, together with existing cash and cash equivalents, should be sufficient to fund projected operating requirements through at least the next 24 months and to fund the Phase 1 clinical studies for XMT-1522 and XMT-1536.