On December 27, 2018 Merus N.V. (Nasdaq: MRUS) ("Merus", "we", "our" or the "Company"), a clinical-stage immuno-oncology company developing Biclonics, innovative full-length human bispecific antibody therapeutics, reported financial results for the third quarter ended September 30, 2018 and provided a business update (Press release, Merus, DEC 27, 2018, View Source;p=RssLanding&cat=news&id=2381675 [SID1234532299]).
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"I am pleased to report progress on several fronts," said Ton Logtenberg, Ph.D., President and Chief Executive Officer of Merus. "We have continued to make advancements in each of our clinical programs and are moving closer to bringing novel treatments to oncology patients. Dose escalation in the MCLA-117 trial is progressing, and encouraging data from MCLA-128 has helped to form our long-term plans for the program. Ongoing work within our Biclonics platform gives us confidence that we will continue to produce differentiated, best-in-class bispecific antibody programs. Looking ahead, 2019 will be an important year for Merus as we anticipate reaching several potential milestones and begin to unveil more details within our pipeline."
Clinical Programs and Business Update:
MCLA-128: Antibody-dependent cell-mediated cytotoxicity (ADCC)-enhanced Biclonics binding to HER2 and HER3-expressing tumor cells for the treatment of solid tumors
Metastatic breast cancer: The Phase 2, open-label, multicenter international clinical trial evaluating MCLA-128 in combination treatments in two metastatic breast cancer (mBC) populations continues to enroll HER2-positive patients and hormone receptor positive/HER2-low patients at sites in the United States (U.S.) and Europe. Merus plans to provide an update on the trial in the second half of 2019.
MCLA-128 data presented at scientific conference: In October 2018, Merus presented a poster at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress outlining overall safety data as well as preliminary activity data in the gastric cancer (GC) patient cohort of the Phase 2 portion our Phase 1/2 study of MCLA-128. In the 97 patients treated with MCLA-128 across all indications explored in the study, MCLA-128 was well tolerated and showed a low risk of immunogenicity. The MCLA-128 poster can be accessed on the Merus website through the link here.
Gastric: In GC patients, evidence of activity of single agent MCLA-128 was shown in heavily pretreated HER2-positive metastatic GC/gastro-esophageal junction (GEJ) cancer patients progressing on 1 to 3 prior anti-HER2-targeted therapies. Based on this data, the company believes MCLA-128 warrants further evaluation in rational therapeutic combinations in the GC/GEJ cancer patient population. Merus is evaluating options and timing for potential combination trials in GC.
NSCLC, Endometrial and Ovarian: Enrollment in the non-small cell lung cancer (NSCLC) cohort is ongoing. In endometrial and ovarian patient populations, although activity has been observed, Merus has made a strategic decision to discontinue further development alone or in combination in order to dedicate resources to other programs.
MCLA-128 is an ADCC-enhanced Biclonics designed to address HER3-expressing solid tumor cells. MCLA-128 employs a unique mechanism, DOCK & BLOCK, to bind to HER2 and HER3-expressing solid tumor cells (DOCK) for the selective and potent inhibition of the heregulin/HER3 tumor-signaling pathway (BLOCK). MCLA-128 is designed to overcome the inherent and acquired resistance of tumor cells to HER2-targeted therapies using two mechanisms: blocking growth and survival pathways to stop tumor expansion and recruitment and enhancement of immune effector cells to eliminate the tumor.
MCLA-117: Biclonics binding to CD3 and CLEC12A for the treatment of Acute Myeloid Leukemia (AML)
The Phase 1 clinical trial for MCLA-117 continues in Europe and the U.S., with several additional trial sites recently opened. The trial is progressing as planned and preliminary anti-tumor activity has been observed in the most recent cohort completed. Dose escalation continues steadily and carefully in order to establish the optimal therapeutic window. Merus plans to provide further guidance on the program upon announcement of the maximum tolerated dose (MTD) and anticipates data readouts for the Phase 1 trial in the second half of 2019.
The Phase 1 trial is a single-arm, open-label, global study to assess the safety, tolerability and anti-tumor activity of MCLA-117. The first phase of the MCLA-117 study is designed as a dose escalation study, followed by a second safety dose expansion phase. The initial dose of the trial was determined using minimal anticipated biological effect level (MABEL) dose escalation requirements, and careful dose escalation is being explored due to the inherent potent activity of T-cell engagers. The primary endpoint is safety and tolerability; secondary endpoints include pharmacokinetic measures, anti-tumor response and clinical benefit.
MCLA-117 is a Biclonics that binds to CD3, a cell-surface molecule present on all T cells, and CLEC12A, a cell surface molecule present on AML tumor cells and AML stem cells. MCLA-117 is designed to recruit and activate T-cells to kill CLEC12A-expressing malignant cells which may prevent recurrence of the tumor. MCLA-117 has a full-length IgG format with a silenced constant region, which Merus believes may contribute to safety and more predictability during manufacturing and upon injection in patients.
MCLA-158: An ADCC-enhanced Biclonics binding to cancer initiating cells expressing leucine-rich repeat-containing G protein-coupled receptor 5 (Lgr5) and epidermal growth factor (EGFR) for the treatment of solid tumors.
The Phase 1, open-label, multicenter clinical trial in patients with solid tumors is ongoing and progressing as planned. The trial is being conducted in Europe and the U.S. The initial indication is in metastatic colorectal cancer with additional solid tumors under consideration. Emerging data for the Phase 1 trial is expected at the end of 2019.
MCLA-158 is an ADCC-enhanced Biclonics that binds to cancer initiating cells expressing Lgr5 and EGFR. MCLA-158 is designed to use two different mechanisms of action. The first entails blocking of growth and survival pathways in cancer initiating cells. The second exploits the recruitment and enhancement of immune effector cells to directly kill cancer initiating cells that persist in solid tumors and cause relapse and metastasis.
MCLA-145: Biclonics binding to PD-L1 and an undisclosed immunomodulatory target
MCLA-145 continues to progress as planned in Investigational New Drug (IND)-enabling studies. MCLA-145 is the first of up to 11 bispecific antibody programs under the Merus and Incyte global research collaboration. MCLA-145 originated from the Merus platform prior to the agreement. Merus has full rights to develop and commercialize MCLA-145 in the U.S. Further information on MCLA-145 will be provided upon IND acceptance.
MCLA-145 is a Biclonics that is designed to bind to PD-L1 and a non-disclosed second immunomodulatory target.
Third Quarter 2018 Financial Results
Merus ended the third quarter of 2018 with cash, cash equivalents and investments of €209.9 million compared to €190.8 million at December 31, 2017. The increase was primarily the result of the closing of a $55.8 million (€44.8 million) private placement of approximately 3.1 million common shares completed in February 2018.
Total revenue for the three months ended September 30, 2018 was €6.5 million compared to €5.7 million for the same period in 2017. Revenue for the three months ended September 30, 2017 has been restated for the adoption of IFRS 15, a new accounting standard related to revenue recognition. Under IFRS 15, Merus reduced the period that it amortizes revenue for the upfront license payment received from Incyte from 21 years to 9 years, which resulted in €2.3 million of additional revenue for the three months ended September 30, 2017. Revenue is comprised primarily of the amortization of upfront license payments from Merus’ collaboration agreements, and cost reimbursements and research milestones for performance of research and development services under the respective agreements. The increase in revenue for the period is attributable to €0.5 million of amortization of upfront license payments and milestone payments and €0.3 million of collaboration income for expense reimbursements.
Research and development costs for the three months ended September 30, 2018 were €11.9 million compared to €8.0 million for the same period in 2017. The increase in research and development costs reflects the increase in manufacturing costs as well as additional spending in support of the Company’s clinical and preclinical development programs.
Management and administration costs for the three months ended September 30, 2018 were €2.7 million compared to €3.6 million for the same period in 2017. The decrease relates primarily to lower share-based compensation expenses.
Other expenses for the three months ended September 30, 2018 were €3.9 million compared to €2.2 million for the same period in 2017. The increase in other expenses was the result of higher consulting, accounting and professional fees as well as higher facilities-related expenses.
For the three months ended September 30, 2018, Merus reported a net loss of €10.7 million, or €0.47 net loss per share (basic and diluted), compared to a net loss of €13.4 million, or €0.69 net loss per share (basic and diluted), for the same period in 2017. Net loss for the three months ended September 30, 2017 has been restated for the adoption of IFRS 15 which resulted in a reduction of net loss of €2.3 million or €0.12 per share (basic and diluted). The net loss for the three months ended September 30, 2018 includes approximately €0.9 million of unrealized foreign currency gains as compared to €5.5 million of unrealized foreign currency losses in the same period 2017.
Financial Outlook
Based on the Company’s current operating plan, Merus expects that its existing cash, cash equivalents and investments will be sufficient to fund its operations into the second quarter of 2021. The extended cash runway is primarily due to proceeds received from the $15 million investment by Regeneron Pharmaceuticals as part of a litigation settlement, the re-prioritization of MCLA-128 spending and expected efficiencies in CMC related expenses