2023-06-15 18:52:48 ET
Summary
- Mersana is an antibody drug conjugate pioneer that expects to release data from a pivotal study of lead candidate UpRi in ovarian cancer very soon.
- The company has been rocked as its latest safety data shared with the FDA revealed five patient fatalities reportedly related to bleeding episodes.
- The data remains under investigation, but the market has responded - Mersana stock is down nearly 60% today.
- Mersana's share price had been rising as rival Immunogen's ADC Elahere showed some very strong data in PROC in a post-approval data set, suggesting UpRi could be as effective.
- Now it seems that Mersana's approach to ADC development could be seriously flawed. Only time will tell but it's clearly a difficult day for the company.
Investment Overview
Mersana Therapeutics ( MRSN ) shares are in freefall - the stock price is down 58% today (at the time of writing), trading at a price of ~$4, owing to a partial clinical hold pausing new patient enrollment in the company's UP-NEXT and UPGRADE-A clinical trials of lead asset upifitamab rilsodotin in platinum-sensitive ovarian cancer.
It may interest investors to know however that Mersana stock was trading at lower value less than two months ago. Shares took flight at the beginning of May - rising from $3.7, to >$8 per share in less than one week.
To explain why Mersana has been on such a roller-coaster ride and speculate about what direction it may move in next, it's necessary to take a step backward and study the path that the company - which enjoys a >$1bn market cap valuation even after today's sell-off - has been pursuing.
Mersana - An ADC Pioneer That Just Had Its Wings Clipped
Mersana is a specialist in a specific field of drug development - antibody drug conjugates ("ADCs") - described as follows by ADCReview.com :
Antibody-drug conjugates or ADCs are a new class of highly potent biopharmaceutical drug composed of an antibody linked, via a chemical linker, to a biologically active drug or cytotoxic compound.
These targeted agents combine the unique and very sensitive targeting capabilities of antibodies allowing sensitive discrimination between healthy and cancer tissues with the cell-killing ability of cytotoxic drugs.
The best known ADC drug developer - responsible for four of 12 ADCs approved for commercial use to date by the FDA - is Seattle based Seagen - formerly known as Seattle Genetics.
Seagen markets and sells ADCETRIS, approved to treat Hodgkin's Lymphoma and T-cell Lymphoma, PADCEV, approved for Urothelial (bladder) cancer, and TIVDAK, approved for Cervical Cancer. These three drugs earned, respectively, $839m - up 23% year-on-year - $451m - up 33% year-on-year - and $63m - up 923% yoy - in 2022.
In March, Pharma giant Pfizer ( PFE ) announced that it was set to acquire Seagen in a deal worth $43bn. Pfizer's CEO Albert Bourla said of the deal "We are not buying the golden eggs, we are acquiring the goose that is laying the golden eggs."
Long story short, ADCs are becoming an extremely valuable commodity within the pharmaceutical industry, and Mersana exists at the sharp end of this nascent field of drug development. Its lead asset is upifitamab rilsodotin - "UpRi" for short which the company refers to as:
... a first-in-class Dolaflexin ADC targeting NaPi2b, an antigen broadly expressed in ovarian cancer and other cancers.
According to Mersana's Q321 10Q :
We are currently evaluating UpRi in platinum-resistant ovarian cancer in a single-arm registrational trial, which we refer to as UPLIFT, for which we completed enrollment of approximately 270 patients in October 2022. We expect to report top-line data from UPLIFT in mid 2023 following the major oncology conferences scheduled for June, and, if the data are positive, to submit a biologics license application, or BLA, to the U.S. Food and Drug Administration, or FDA, under the accelerated approval pathway around the end of 2023.
This trial is fully enrolled and is not affected by the FDA's partial hold. According to a Mersana press release issued today:
Patients who are already enrolled in these trials may continue receiving UpRi. Mersana expects to lock its UPLIFT clinical trial database and disclose UPLIFT top-line data by early August.
Besides UPLIFT, however, Mersana has recently initiated two more studies of UpRi - back to the 10Q:
We also initiated screening of patients in UP-NEXT, our Phase 3 clinical trial of UpRi as monotherapy maintenance treatment following treatment with platinum doublets in recurrent platinum-sensitive ovarian cancer, in the third quarter of 2022.
Additionally, we also are conducting a Phase 1 combination trial, which we refer to as UPGRADE-A, exploring the combination of UpRi with carboplatin, a standard platinum chemotherapy broadly used in the treatment of platinum-sensitive ovarian cancer.
Mersana says that UP-NEXT could "serve as a post-approval confirmatory trial" in the US if data were positive, support ex-US approvals and "support UpRi's expansion into earlier lines of therapy." The earlier the line of therapy, generally, the larger the market opportunity. The UPGRADE-A study, it was hoped by management, would allow the company to explore UpRi in combination with other therapies, widening its scope.
Why Has The FDA Placed A Clinical Hold on Mersana's UP-NEXT and UPGRADE-A Studies?
According to Mersana's press release :
Mersana’s recent assessment determined that serious bleeding events appear to occur at a higher rate than background. While most bleeding cases in this aggregate safety analysis were low-grade, five (<1%) Grade 5 (fatal) bleeding events were observed among the approximately 560 patients dosed to date. The causes of bleeding events remain under investigation.
A single fatality could possibly have triggered a clinical hold - five reported fatalities certainly seems to suggest there apparently may be a very serious issue with Mersana's lead asset. Apparently, the fatalities became known to the FDA after Mersana submitted its latest batch of safety data to the FDA, whose response was to issue the clinical hold. As mentioned, the fully enrolled UPLIFT study is unaffected, while patients already enrolled in the UPLIFT and UPGRADE-A studies can continue to receive treatment.
Mersana's Chief Executive Officer ("CEO") Anna Protopapas commented via the press release:
Patient safety is always at the forefront for us, and work is now underway to compile further analyses that may inform FDA. Additionally, with UPLIFT top-line data on the near-term horizon, we will soon have a much more complete assessment of both the efficacy and safety profile for UpRi in platinum-resistant ovarian cancer.
Interpreting The Clinical Hold - Concerns For Patients and Wider Impact
Clearly, the news is challenging for Mersana and its share price reflects that. The gains the company's stock realized in May were in fact related to a direct rival's positive late stage ovarian cancer drug data.
Immunogen's Elahere received an accelerated approval to treat platinum resistant ovarian cancer in November last year. The drug is a first-in-class ADC directed against FR?, a cell-surface protein highly expressed in ovarian cancer - in short, it has a similar mechanism of action ("MoA") to UpRi. Approval was granted based on a single-arm study of 106 patients that demonstrated an overall response rate ("ORR") of 31.7%, and median duration of response of 6.9m.
The accelerated approval did not do much for Immunogen's share price, but in April, the company forecast FY23 Elahere sales of $45 - $50m, giving its stock a lift, and Mersana's also.
Then, last month, Immunogen released data from its MIRASOL confirmatory study revealing statistically significant improvements in progression-free survival ("PFS") and overall survival ("OS"). Elahere had previously failed a Phase 3 study, but MIRASOL data suggested the drug could cut the risk of death by 33% compared to chemotherapy, and made it the first to show an overall survival benefit. Immunogen stock has subsequently risen from $4 per share, to $19 per share - a ~375% gain.
As analysts set peak sales expectations for Elahere in platinum-resistant ovarian cancer ("PROC") space to >$200m per annum, Mersana stock also jumped, with UpRi regarded as having a good chance to repeat Elahere's success. After today's news however, the prospect of a near-term approval now looks to be much more remote.
According to Ovarian Cancer Research Alliance ("OCRA"), the five-year survival rate for Ovarian Cancer is 49.7%, which is much lower than most other cancers. For example, in Immunogen's MIRASOL study, there were two deaths in the Elahere arm of the study, and two deaths in the chemotherapy study.
Clearly, that does not exempt Mersana, especially as there were five deaths reported, all reportedly related to episodes of bleeding. It's hard to see what kind of path Mersana can plot subsequent to a setback as significant as this. Speculation online seems to suggest that this could be the end of the road for the entire UpRi project.
Although the drug may have a similar MoA to Elahere, clearly the two drug candidates are not identical, and it may be that the latest safety data has uncovered a fatal issue with the drug.
What Next For Mersana?
It may be fair to say that at the present moment Mersana looks uninvestable. If you were looking for any signs of hope, UpRi is being evaluated in patients that have already been heavily pre-treated and failed to respond to their first three lines of therapy. According to OncLive:
Patients with platinum-resistant ovarian cancer have long represented an area of unmet medical need; standard-of-care treatments such as pegylated liposomal doxorubicin and topotecan have displayed response rates only up to approximately 12% and median progression-free survival - PFS - times of approximately four months. Investigators are hoping to dramatically improve the platinum-resistant ovarian cancer treatment paradigm with the development of the first-in-class antibody-drug conjugate - ADC - upifitamab rilsodotin.
“Recurrent ovarian cancer remains a high unmet need because [essentially] every patient who gets it dies,” Bradley J. Monk, MD, said in an interview with OncologyLive . “When patients respond to platinum [chemotherapy], generally the platinum doublet liposomal doxorubicin, but sometimes paclitaxel or gemcitabine with or without bevacizumab [Avastin] and sometimes with a PARP inhibitor in the maintenance [setting]. [When the regimens are effective] that’s great, but it’s not enough because those patients ultimately recur and die of their disease.”
If UpRi were to demonstrate a very high level of response when full data from the UPLIFT study is released, that was significantly higher than Elahere, say, would the additional safety risk be justified? Or, could the safety risk be mitigated with the use of other drugs?
At this point, it's difficult to speculate one way or the other, although there do not appear to have been any clues that bleeding could be an issue based on prior data. In this slide from a February 2023 presentation, the safety report paints a relatively positive picture.
Concluding Thoughts - Patients The Priority, Patience A Virtue
The seemingly obvious conclusion based on today's news is that, somewhere along the line, there has been a major misstep, and with patients safety the priority, perhaps it would not be surprising if a partial turned into a full clinical hold.
As an outsider / layman investor, it's tough to speculate on what may have occurred and what the outcome may be, but with Elahere already approved, it's hard to make a case for approving a drug with an equivalent efficacy profile but a significant question mark over safety.
Only time will tell - Mersana may be optimistic that its fuller datasets will make the case that the drug is safe, or that the efficacy justifies the risks, although that seems unlikely.
Perhaps remarkably, Mersana's market cap valuation remains >$1bn after today's sell-off, although prior to the news the outlook for Mersana looked promising. A development deal had been signed with Johnson & Johnson's ( JNJ ) drug development subsidiary Janssen, which paid $40m upfront and offered >$1bn in future milestone payments - so-called " biobucks."
Another deal with GSK ( GSK ) paid $100m upfront with $1.3bn in biobucks on the table, and royalties on commercial sales, and a third, with Merck, paid $30m upfront + $800m in potential milestones. The company reported $274m in cash as of Q123, which management expected to support operating plan commitments into the second half of 2024.
Mercifully, perhaps, for Mersana, the next key data catalyst will arrive soon with the full UPLIFT UpRi data. Investors may want to wait for that data - and any further updates from the FDA and the company re the bleeding episodes - before making any financial decisions.
For further details see:
Mersana Therapeutics: Stock Declines On Clinical Hold