Mersana Therapeutics(US:MRSN)2025-08-13 12:56PART I – FINANCIAL INFORMATION This section covers financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements Financial statements for Q2 2025 reflect a deteriorating position, increased net loss, and going concern doubts Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $76,972 | $107,750 | | Total current assets | $80,141 | $136,904 | | Total assets | $84,573 | $144,663 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $59,338 | $62,458 | | Total liabilities | $137,719 | $154,172 | | Total stockholders' deficit | ($53,146) | ($9,509) | Condensed Consolidated Statements of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $3,056 | $2,293 | $5,810 | $11,538 | | Research and development | $16,218 | $17,245 | $34,559 | $35,931 | | General and administrative | $7,415 | $10,503 | $16,340 | $22,063 | | Restructuring expenses | $3,940 | $— | $3,940 | $— | | Net loss | ($24,296) | ($24,268) | ($48,419) | ($43,574) | | Net loss per share | ($4.87) | ($4.96) | ($9.72) | ($8.93) | - The company has incurred cumulative net losses and negative cash flows since inception, with a net loss of $48.4 million for the six months ended June 30, 2025, and an accumulated deficit of $944.0 million, raising substantial doubt about its ability to continue as a going concern32 - On July 25, 2025, the company effected a 1-for-25 reverse stock split, with all share and per share amounts retroactively adjusted to reflect this split39 Notes to Condensed Consolidated Financial Statements Notes detail ADC platforms, clinical candidates, May 2025 restructuring, collaboration revenue, and debt repayment - In May 2025, the company implemented a strategic restructuring plan, reducing its employee base by approximately 55% and narrowing its focus to Emi-Le development for breast cancer and the XMT-2056 trial30 - Collaboration revenue for the six months ended June 30, 2025, was primarily driven by performance under agreements with Johnson & Johnson ($4.0 million), GSK ($1.0 million), and Merck KGaA ($0.5 million)617383 - On July 1, 2025, the company fully repaid all amounts owed under its New Credit Facility, paying approximately $17.9 million, which included $16.7 million of principal101 Restructuring Charges (in thousands) | Item | Three and six months ended June 30, 2025 | | :--- | :--- | | Total Costs Incurred | $3,940 | | Research and development related | $2,919 | | General and administrative related | $1,021 | | Accrued Restructuring Costs | | | Balance at Dec 31, 2024 | $— | | Additional expense | $3,940 | | Cash payments | ($2,373) | | Balance at June 30, 2025 | $1,567 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical candidates, restructuring, financial performance, and liquidity, noting going concern doubts - The company is focusing on its two clinical-stage candidates: Emi-Le (B7-H4-targeting Dolasynthen ADC) and XMT-2056 (HER2-targeting Immunosynthen ADC)152 - Positive interim data for Emi-Le presented at ASCO 2025 showed a 31% confirmed ORR in patients with B7-H4 high tumor expression and a 56% ORR in patients with ACC-1154155 - A strategic restructuring was implemented in May 2025, reducing the workforce by approximately 55% and narrowing focus to breast cancer for Emi-Le, with estimated aggregate costs of $4.0 - $4.5 million159160 - As of June 30, 2025, the company had $77.0 million in cash and cash equivalents, which is projected to fund operations into mid-2026, but there is substantial doubt about the company's ability to continue as a going concern165207 Results of Operations Collaboration revenue varied by period, while operating expenses declined due to restructuring efforts Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $3,056 | $2,293 | $763 | | R&D Expense | $16,218 | $17,245 | ($1,027) | | G&A Expense | $7,415 | $10,503 | ($3,088) | | Restructuring Expense | $3,940 | $— | $3,940 | | Net Loss | ($24,296) | ($24,268) | ($28) | Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Item | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $5,810 | $11,538 | ($5,728) | | R&D Expense | $34,559 | $35,931 | ($1,372) | | G&A Expense | $16,340 | $22,063 | ($5,723) | | Restructuring Expense | $3,940 | $— | $3,940 | | Net Loss | ($48,419) | ($43,574) | ($4,845) | Liquidity and Capital Resources Liquidity relies on collaborations and equity, with $77.0 million cash, but additional capital is needed for going concern - As of June 30, 2025, the company had $77.0 million in cash and cash equivalents, and on July 1, 2025, it repaid its entire debt facility for approximately $17.9 million197201 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($51,928) | ($54,512) | | Net cash provided by (used in) investing activities | $27,395 | ($67,033) | | Net cash (used in) provided by financing activities | ($6,245) | $5,982 | - The company will need to raise additional funds through equity offerings, debt, or collaborations to continue operations, as failure to do so could force delays or elimination of development programs207 Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity on cash and equivalents, with no material foreign currency exposure - The company's main market risk is interest rate sensitivity on its $77.0 million in cash and cash equivalents, but a 1% change in interest rates is not expected to have a material impact due to the short-term and low-risk nature of its investments214 - The company is not currently exposed to material foreign currency exchange rate risks, though this could change with increased contracts with vendors in Europe or Asia215 Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025217 - No material changes to the company's internal control over financial reporting occurred during the second quarter of 2025218 PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other information, and exhibits Item 1. Legal Proceedings The company is not currently involved in material legal proceedings, but may face claims in the ordinary course - As of the filing date, Mersana Therapeutics is not involved in any material legal proceedings219 Item 1A. Risk Factors This section details significant financial, developmental, operational, and regulatory risks, including going concern doubts - A primary risk is the need for substantial additional financing to achieve its goals, as current cash is projected to last only into mid-2026, raising substantial doubt about its ability to continue as a going concern221225 - The company's business is highly dependent on the success of its two clinical-stage candidates, Emi-Le and XMT-2056, and any failure in their clinical development would severely affect the business235236 - The May 2025 restructuring and workforce reduction may not result in anticipated savings and could disrupt business operations, reduce employee morale, and harm the ability to attract and retain qualified personnel455 - The company relies heavily on third-party manufacturers for clinical supplies and CROs to conduct clinical trials, exposing it to risks of supply interruption, quality issues, and lack of direct control over trial execution262266 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period covered by this report - There were no unregistered sales of equity securities in the reported period496 Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted or terminated a Rule 10b5-1 or non-10b5-1 trading plan during the second quarter of 2025497 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate documents and officer certifications