mrsn_Current_Folio_10Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10‑Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38129


Mersana Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware

    

04‑3562403

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

840 Memorial Drive Cambridge, MA 02139

(Address of principal executive offices)

(Zip Code)

(617) 498‑0020

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer

    

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes  ☐  No  .

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value

MRSN

The Nasdaq Global Select Market

 

There were 47,716,857 shares of Common Stock ($0.0001 par value per share) outstanding as of May 8, 2019.

 

 

 


 

Table of Contents

Unless otherwise stated or the context requires otherwise, all references to “us,” “our,” “we,” the “Company” and similar designations in this Quarterly Report on Form 10-Q refer to Mersana Therapeutics, Inc. and its consolidated subsidiary, Mersana Securities Corp.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward‑looking statements. Forward‑looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words “anticipate,” “believe,” “estimate,” “expect,” “goal,” “intend,” “may,” “seek,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “possible,” “could,” “should,” “continue,” “contemplate” or the negative of these terms or other similar expressions are intended to identify forward‑looking statements, although not all forward‑looking statements contain these identifying words.

These forward‑looking statements include, among other things, statements about:

·

the initiation, cost, timing, progress and results of our current and future research and development activities, preclinical studies and clinical trials;

·

the potential benefits of strategic partnership agreements and our ability to enter into selective strategic partnership arrangements;

·

the timing of, and our ability to obtain and maintain, regulatory approvals for our product candidates;

·

our ability to quickly and efficiently identify and develop additional product candidates;

·

our ability to advance any product candidate into, and successfully complete, clinical trials;

·

our intellectual property position, including with respect to our trade secrets; and

·

our estimates regarding expenses, future revenues, capital requirements, the sufficiency of our current and expected cash resources and our need for additional financing.

We may not actually achieve the plans, intentions or expectations disclosed in our forward‑looking statements, and you should not place undue reliance on our forward‑looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward‑looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward‑looking statements that we make. Our forward‑looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

The forward‑looking statements contained herein represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our views to change. However, we disclaim any obligation to update these forward‑looking statements, except to the extent required by applicable law. You should, therefore, not rely on these forward‑looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

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TABLE OF CONTENTS

 

 

 

Page

PART I – FINANCIAL INFORMATION 

 

Item 1. Financial Statements (unaudited) 

 

Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 

4

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018 

5

Condensed Consolidated Statement of Stockholders’ Equity 

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 

7

Notes to Condensed Consolidated Financial Statements 

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk 

28

Item 4. Controls and Procedures 

28

PART II - OTHER INFORMATION 

29

Item 1. Legal Proceedings 

29

Item 1A. Risk Factors 

29

Item 5. Other Information 

29

Item 6. Exhibits 

30

Signatures 

31

 

 

 

 

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Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.    Financial Statements

Mersana Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

137,279

 

$

59,634

Short-term marketable securities

 

 

 —

 

 

10,497

Accounts receivable

 

 

468

 

 

459

Prepaid expenses and other current assets

 

 

3,326

 

 

3,715

Total current assets

 

 

141,073

 

 

74,305

Property and equipment, net

 

 

2,868

 

 

2,694

Operating lease right-of-use assets

 

 

3,944

 

 

 —

Other assets

 

 

1,503

 

 

1,503

Total assets

 

$

149,388

 

$

78,502

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,965

 

$

10,727

Accrued expenses

 

 

7,938

 

 

12,375

Deferred revenue

 

 

5,604

 

 

46,196

Operating lease liabilities

 

 

2,005

 

 

 —

Other liabilities

 

 

83

 

 

127

Total current liabilities

 

 

22,595

 

 

69,425

Operating lease liabilities, net of current portion

 

 

2,375

 

 

 —

Other liabilities, net of current portion

 

 

346

 

 

282

Total liabilities

 

 

25,316

 

 

69,707

Commitments (Note 11)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

 —

 

 

 —

Common stock, $0.0001 par value; 175,000,000 shares authorized; 47,684,164 and 23,234,472 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

 5

 

 

 3

Additional paid-in capital

 

 

266,332

 

 

172,966

Accumulated other comprehensive loss

 

 

 —

 

 

(8)

Accumulated deficit

 

 

(142,265)

 

 

(164,166)

Total stockholders’ equity

 

 

124,072

 

 

8,795

Total liabilities and stockholders’ equity

 

$

149,388

 

$

78,502

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Mersana Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31, 

 

    

 

2019

    

 

2018

 

 

 

 

 

 

 

Collaboration revenue

 

$

41,035

 

$

3,064

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

15,143

 

 

12,256

General and administrative

 

 

4,443

 

 

3,571

Total operating expenses

 

 

19,586

 

 

15,827

Other income:

 

 

 

 

 

 

Interest income

 

 

452

 

 

360

Total other income

 

 

452

 

 

360

Net income (loss)

 

 

21,901

 

 

(12,403)

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

 8

 

 

(13)

Comprehensive income (loss)

 

$

21,909

 

$

(12,416)

Net income (loss) attributable to common stockholders — basic and diluted

 

$

21,901

 

$

(12,403)

Net income (loss) per share attributable to common stockholders — basic

 

$

0.72

 

$

(0.54)

Net income (loss) per share attributable to common stockholders — diluted

 

$

0.70

 

$

(0.54)

Weighted-average number of shares of common stock used in net income (loss) per share attributable to common stockholders — basic

 

 

30,299,650

 

 

22,816,521

Weighted-average number of shares of common stock used in net income (loss) per share attributable to common stockholders — diluted

 

 

31,461,696

 

 

22,816,521

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Mersana Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Accumulated

 

 

 

 

 

 

 

Common Stock

 

Paid-in

 

Other Comprehensive

 

Accumulated

 

Stockholders’

 

    

Shares

    

Amount

    

Capital

 

Income (Loss)

    

Deficit

    

Equity

Balance at December 31, 2017

 

22,765,017

 

$

 3

 

$

168,018

 

$

(149)

 

$

(97,878)

 

$

69,994

Cumulative effect adjustment for adoption of ASC 606

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,031)

 

 

(2,031)

Exercise of stock options

 

104,945

 

 

 —

 

 

255

 

 

 —

 

 

 —

 

 

255

Stock-based compensation expense

 

 —

 

 

 —

 

 

745

 

 

 —

 

 

 —

 

 

745

Other comprehensive loss

 

 —

 

 

 —

 

 

 —

 

 

(13)

 

 

 —

 

 

(13)

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(12,403)

 

 

(12,403)

Balance at March 31, 2018

 

22,869,962

 

 

 3

 

 

169,018

 

 

(162)

 

 

(112,312)

 

 

56,547

Exercise of stock options

 

247,776

 

 

 —

 

 

470

 

 

 —

 

 

 —

 

 

470

Stock-based compensation expense

 

 —

 

 

 —

 

 

958

 

 

 —

 

 

 —

 

 

958

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

72

 

 

 —

 

 

72

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(12,354)

 

 

(12,354)

Balance at June 30, 2018

 

23,117,738

 

 

 3

 

 

170,446

 

 

(90)

 

 

(124,666)

 

 

45,693

Exercise of stock options

 

43,137

 

 

 —

 

 

128

 

 

 —

 

 

 —

 

 

128

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,053

 

 

 —

 

 

 —

 

 

1,053

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

48

 

 

 —

 

 

48

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(17,069)

 

 

(17,069)

Balance at September 30, 2018

 

23,160,875

 

 

 3

 

 

171,627

 

 

(42)

 

 

(141,735)

 

 

29,853

Exercise of stock options

 

31,411

 

 

 —

 

 

65

 

 

 —

 

 

 —

 

 

65

Purchase of common stock under ESPP

 

42,186

 

 

 —

 

 

146

 

 

 —

 

 

 —

 

 

146

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,128

 

 

 —

 

 

 —

 

 

1,128

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

34

 

 

 —

 

 

34

Net loss

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(22,431)

 

 

(22,431)

Balance at December 31, 2018

 

23,234,472

 

 

 3

 

 

172,966

 

 

(8)

 

 

(164,166)

 

 

8,795

Exercise of stock options

 

12,192

 

 

 —

 

 

42

 

 

 —

 

 

 —

 

 

42

Issuance of common stock under public offering, net of issuance costs of $5,587

 

24,437,500

 

 

 2

 

 

92,160

 

 

 —

 

 

 —

 

 

92,162

Stock-based compensation expense

 

 —

 

 

 —

 

 

1,164

 

 

 —

 

 

 —

 

 

1,164

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 8

 

 

 —

 

 

 8

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

21,901

 

 

21,901

Balance at March 31, 2019

 

47,684,164

 

$

 5

 

$

266,332

 

$

 —

 

$

(142,265)

 

$

124,072

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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Mersana Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31, 

 

    

2019

    

2018

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

21,901

 

$

(12,403)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

337

 

 

258

Loss on disposal of fixed assets

 

 

 —

 

 

20

Net amortization of premiums and discounts on investments

 

 

 4

 

 

(157)

Stock-based compensation

 

 

1,164

 

 

745

Non-cash rent expense

 

 

26

 

 

13

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(9)

 

 

496

Prepaid expenses and other current assets

 

 

389

 

 

(1,086)

Other assets

 

 

 —

 

 

(1,433)

Accounts payable

 

 

(3,444)

 

 

(617)

Accrued expenses

 

 

(4,463)

 

 

(1,249)

Deferred revenue

 

 

(40,592)

 

 

(1,977)

Net cash used in operating activities

 

 

(24,687)

 

 

(17,390)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Maturities of marketable securities

 

 

10,500

 

 

23,165

Purchase of property and equipment

 

 

(372)

 

 

(267)

Net cash provided by investing activities

 

 

10,128

 

 

22,898

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Net proceeds from public offering of common stock

 

 

92,162

 

 

 —

Proceeds from exercise of stock options

 

 

42

 

 

255

Net cash provided by financing activities

 

 

92,204

 

 

255

 

 

 

 

 

 

 

Increase in cash, cash equivalents and restricted cash

 

 

77,645

 

 

5,763

Cash, cash equivalents and restricted cash, beginning of period

 

 

60,005

 

 

26,962

Cash, cash equivalents and restricted cash, end of period

 

$

137,650

 

$

32,725

 

 

 

 

 

 

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

Purchases of property and equipment in accounts payable and accrued expenses

 

$

26

 

$

320

Property and equipment acquired under finance leases

 

$

429

 

$

 —

Adjustment to accumulated deficit and deferred revenue upon adoption of Topic 606

 

$

 —

 

$

2,031

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

 

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Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements

(unaudited)

(in thousands, except share and per share data)

1. Nature of business and basis of presentation

Mersana Therapeutics, Inc. is a clinical stage biopharmaceutical company located in Cambridge, Massachusetts. The Company is focused on developing antibody drug conjugates (ADCs) that offer a clinically meaningful benefit for cancer patients with significant unmet need. The Company has leveraged over 20 years of industry learning in the ADC field to develop proprietary technologies that enable it to design ADCs to have improved efficacy, safety and tolerability relative to existing ADC therapies. The Company’s novel platform, Dolaflexin, has been used to generate proprietary ADC product candidates to address patient populations that are not currently amenable to treatment with traditional ADC‑based therapies. The Company’s lead product candidate, XMT‑1536, is an ADC targeting NaPi2b, an antigen broadly expressed in ovarian cancer and non small cell lung cancer (NSCLC). The first patient was dosed on XMT‑1536 in late 2017 and the study is currently in Phase 1 dose escalation in ovarian cancer, NSCLC and other orphan indications where a majority of patients express NaPi2b including endometrial, papillary renal, papillary thyroid, and salivary duct cancers.

In January 2019, following a strategic evaluation by the Company of the competitive environment for HER2-targeted therapies, the Company and its former partner, Takeda Pharmaceutical Company Limited, or Takeda, discontinued the development of XMT-1522, which was then being studied in the dose escalation of a Phase 1 clinical trial. The Company’s collaboration agreements with Takeda were terminated during the first quarter of 2019.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval and reimbursement for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products.

The Company has incurred cumulative net losses since inception. In the first quarter of 2019, the Company recognized deferred revenue of $39,965 as a result of the above-mentioned discontinuation of the partnerships with Takeda, resulting in net income of $21,901 for the three months ended March 31, 2019. Cash used in operations for the period was $24,687. The Company’s net loss was $64,257 for the year ended December 31, 2018. The Company expects to continue to incur operating losses for at least the next several years. As of March 31, 2019, the Company had an accumulated deficit of $142,265. The future success of the Company is dependent on its ability to identify and develop its product candidates, and ultimately upon its ability to attain profitable operations. The Company has devoted substantially all of its financial resources and efforts to research and development and general and administrative expense to support such research and development. The Company’s net losses may fluctuate significantly from quarter to quarter and year to year. Net losses and negative cash flows have had, and will continue to have, an adverse effect on the Company’s stockholders' equity and working capital. The Company believes that its existing cash and cash equivalents as of March 31, 2019 will enable it to fund its operating plan through at least mid 2021.

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2018 and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 8, 2019.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed

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Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of March 31, 2019, the results of its operations for the three months ended March 31, 2019 and 2018 and cash flows for the three months ended March 31, 2019 and 2018. Such adjustments are of a normal and recurring nature, other than the adjustments associated with the adoption of ASC 842, Leases (ASC 842). The results for the three months ended March 31, 2019 are not necessarily indicative of the results for the year ending December 31, 2019, or for any future period.

Effective January 1, 2019, the Company adopted the requirements of ASC 842 using the modified retrospective method as discussed below in Note 2: Summary of Significant Accounting Policies.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include those of the Company and its subsidiary, Mersana Securities Corp. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company’s management evaluates its estimates, which include, but are not limited to, management’s judgments with respect to the performance obligations and estimated selling prices within its revenue arrangements, accrued expenses, valuation of stock-based awards and income taxes. Actual results could differ from those estimates.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company operates and manages its business as a single operating segment, which is the business of discovering and developing ADCs.

Summary of Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2019 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2018 Annual Report on Form 10-K, except as noted below with respect to the Company’s lease accounting policies and as disclosed within the “Recently issued accounting pronouncements” section below.

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820 Fair Value Measurement (ASC 820) establishes a three-level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

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Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with an original maturity, or a remaining maturity at the time of purchase, of three months or less to be cash equivalents. The Company invests excess cash primarily in money market funds, commercial paper and government agency securities, which are highly liquid and have strong credit ratings. These investments are subject to minimal credit and market risks. Cash and cash equivalents are stated at cost, which approximates market value.

The following amounts were presented as cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Three months ended

 

March 31, 2019

 

March 31, 2018

 

Beginning

 

End

 

Beginning

 

End

 

of period

    

of period

 

of period

    

of period

Cash and cash equivalents

$

59,634

 

$

137,279

 

$

26,591

 

$

32,354

Restricted cash included in other assets

 

371

 

 

371

 

 

371

 

 

371

Total cash, cash equivalents and restricted cash per statement of cash flows

$

60,005

 

$

137,650

 

$

26,962

 

$

32,725

Marketable Securities

Short-term marketable securities consist of investments with maturities greater than three months and less than one year from the balance sheet date. Long-term marketable securities consist of investments with maturities greater than one year that are not expected to be used to fund current operations. The Company classifies all of its marketable securities as available-for-sale. Accordingly, these investments are recorded at fair value. Amortization and accretion of discounts and premiums are recorded as interest income within other income. Unrealized gains and losses on available-for-sale securities are included in other comprehensive loss as a component of stockholders’ equity until realized.

Other Assets

The Company recorded other assets of $1,503 as of March 31, 2019 and December 31, 2018, comprised of restricted cash of $371 held as security deposits for a standby letter of credit and $1,132 held by a service provider.

Leases

Consistent with ASC 842, the Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use lease assets (ROU assets), current portion of lease obligations and long-term lease obligations on the Company’s consolidated balance sheets. Assets subject to finance leases are included in property and equipment, and the related lease obligation is included in other current liabilities and other long-term liabilities on the Company’s consolidated balance sheets. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation expense and interest expense using the effective interest method. The Company elected the short-term lease recognition exemption for short-term leases, which allows the Company to not recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less.

10


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating ROU assets and obligations are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The ROU lease asset also includes lease payments made and lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASC 842), which replaced the guidance in ASC 840, Leases. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This standard is effective for the Company in the fiscal year beginning after December 15, 2018. The Company adopted the new standard effective January 1, 2019 using the modified retrospective method as of the beginning of the period of adoption. The Company has elected the package of practical expedients permitted in ASC Topic 842. Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease under ASC Topic 842, (b) whether classification of the operating leases would be different in accordance with ASC Topic 842, or (c) whether the unamortized initial direct costs would have met the definition of initial direct costs in ASC Topic 842 at lease commencement. The Company also elected not to include leases with an initial term of twelve months or less in the recognized ROU asset and lease liabilities. As a result of the adoption of the new lease accounting guidance, the Company recognized on January 1, 2019 (a) an operating lease liability of $4,778, and (b) an operating ROU asset of $4,369 which represents the lease liability of $4,778 adjusted for deferred rent of $409. This standard had a material impact on the Company’s balance sheets but had no impact on the Company’s results of operations and cash flows from operations. The most significant impact was the recognition of ROU assets and lease obligations for operating leases.

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. This guidance simplifies the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions.  This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, and early adoption is permitted. The guidance per ASU 2018-07 is to be adopted by using a modified retrospective approach with the cumulative effect of initially applying the new standard at the date of initial application. The Company adopted the new standard effective January 1, 2019. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808):Clarifying the Interaction between Topic 808 and Topic 606. The main provisions of ASU 2018-18 include: (i) clarifying that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and (ii) precluding the presentation of transactions with collaborative arrangement participants that are not directly related to sales to third parties together with revenue. This guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The guidance per ASU 2018-18 is to be adopted retrospectively to the date of initial application of Topic 606. The Company is currently evaluating the potential impact that ASU No. 2018-18 may have on its financial position and results of operations.

 

 

 

 

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Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

3. Collaboration agreements

Merck KGaA

In June 2014, the Company entered into a Collaboration and Commercial License Agreement with Merck KGaA (the Merck KGaA Agreement). Upon the execution of the agreement, Merck KGaA paid the Company a nonrefundable technology access fee of $12,000 for the right to develop ADCs directed to six exclusive targets over a specified period of time. No additional fees are due when a target is designated and the commercial license to the target is granted. Merck KGaA will be responsible for the product development and marketing of any products resulting from this collaboration.  All six targets were designated prior to 2018. The Company is eligible to receive milestones under the Merck KGaA Agreement. The next potential milestone payment is a development milestone of $500 on Merck KGaA’s designation of a preclinical development candidate for any target. Revenue would be recognized upon achievement of the milestone.

Under the terms of the Merck KGaA Agreement, the Company and Merck KGaA develop research plans to evaluate Merck KGaA's antibodies as ADCs incorporating the Company's technology. The Company receives fees for its efforts under the research plans. The goal of the research plans is to provide Merck KGaA with sufficient information to formally nominate a development candidate and begin IND-enabling studies or cease development on the designated target.

In May 2018, the Company entered into a Supply Agreement with Merck KGaA (the Merck KGaA Supply Agreement). Under the terms of the agreement, the Company will provide Merck KGaA with materials that could be used for IND-enabling studies and clinical trials. The Company receives fees and reimbursement for its efforts under the Merck KGaA Supply Agreement.

Accounting Analysis

The Company identified the following performance obligations under the agreement: (i) exclusive license and research services for six designated targets, (ii) rights to future technological improvements and (iii) participation of project team leaders and providing joint research committee services.

The Company recognizes revenue related to the exclusive license and the research and development services over the estimated period of the research and development services using a proportional performance model.  The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred.  To the extent that the Company receives fees for the research and development services as they are performed, these amounts are recorded as deferred revenue. Revenue related to future technological improvements and joint research committee services will be recognized ratably over the respective performance periods (which in the case of the joint research committee services approximate the time and cost incurred each quarter), which are 10 and five years, respectively.  The Company continues to reassess the estimated remaining term at each subsequent reporting period.

During the three months ended March 31, 2019 and 2018, the Company recorded revenue of $18 and $332, respectively, related to its efforts under the Merck KGaA Agreement. During the three months ended March 31, 2019, the Company recognized revenue and expense of $1,037 related to the Merck KGaA Supply Agreement. Included in accounts receivable as of March 31, 2019 and December 31, 2018 were $427 and $450, respectively, related to the Merck KGaA Supply Agreement.

As of March 31, 2019, the Company had recorded $5,440 in deferred revenue related to the Merck KGaA Agreement and Merck KGaA Supply Agreement that will be recognized in accordance with the proportional performance method.

Takeda XMT-1522 Strategic Partnership

In January 2016, the Company entered into a Development Collaboration and Commercial License Agreement with Takeda through its wholly owned subsidiary, Millennium Pharmaceuticals, Inc. for the development and

12


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

commercialization of XMT-1522 (the XMT-1522 Agreement). Under the XMT-1522 Agreement, Takeda was granted the exclusive right to commercialize XMT-1522 outside of the United States and Canada. Under the XMT-1522 Agreement, the Company was responsible for conducting certain Phase 1 development activities for XMT-1522, including the ongoing Phase 1 clinical trial, at its own expense. The parties agreed to collaborate on the further development of XMT-1522 in accordance with a global development plan (Post-Phase 1 Development). On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the XMT-1522 Agreement upon 30 days’ prior written notice. The XMT-1522 Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the XMT-1522 Agreement as of March 31, 2019.

Under the XMT-1522 Agreement, the Company and Takeda shared equally all Post-Phase 1 Development costs through the date of termination and for a period of 30 days after the effective termination date. For the applicable period within the three months ended March 31, 2019, the Company was billed $200 by Takeda representing the Company’s share of Post-Phase 1 Development costs incurred by Takeda. This amount has been reflected as research and development costs in the consolidated statement of operations.

Takeda strategic research and development partnership

In March 2014, the Company entered into a Research Collaboration and Commercial License Agreement with Takeda through Takeda’s wholly owned subsidiary, Millennium Pharmaceuticals, Inc. (the 2014 Agreement). The 2014 Agreement was amended in January 2015 and amended and restated in January 2016 (the 2016 Restated Agreement). The agreements provided Takeda with the right to develop ADCs directed to a total of seven exclusive targets, designated by Takeda, over a specified period of time. On January 2, 2019, the Company received notice from Takeda stating that Takeda was exercising its right to terminate the 2016 Restated Agreement upon 45 days’ prior written notice. The 2016 Restated Agreement terminated in accordance with its provisions, and the Company and Takeda wound down activities related to the 2016 Restated Agreement as of March 31, 2019.

During the applicable period within the three months ended March 31, 2019, the Company billed Takeda $195 related to ASC 808 costs.

Accounting Analysis

The Company concluded that the termination of the XMT-1522 Agreement and the 2016 Restated Agreement resulted in the completion of all of its remaining performance obligations. As a result, $39,965 of previously deferred revenue related to the Takeda agreements as of December 31, 2018 was recognized as revenue during the three months ended March 31, 2019. 

Included in accounts receivable as of March 31, 2019 and December 31, 2018 was $26 and $9, respectively, related to the Takeda agreements. Included in accounts payable as of March 31, 2019 and December 31, 2018 was $2,754 and $2,749, respectively, related to the Takeda agreements.

13


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of our contract assets and liabilities during the three months ended March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

 

 

 

 

 

 

Beginning

 

 

 

 

 

Balance at

 

    

of Period

    

Additions

    

Deductions

    

End of Period

Three months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Contract assets

 

$

 —

 

$

 —

 

$

 —

 

$

 —

Contract liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

$

46,196

 

$

 —

 

$

40,592

 

$

5,604

During the three months ended March 31, 2019, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods:

 

 

 

 

 

 

Three months ended

 

 

March 31, 2019

Revenue recognized in the period from:

 

 

 

Amounts included in the contract liability at the beginning of the period

 

$

40,592

Performance obligations satisfied in previous periods

 

$

 —

Other Revenue

The Company has provided limited services for a collaboration partner, Asana BioSciences. For the three months ended March 31, 2019 and 2018 the Company recognized revenue of $15 and $195, respectively, related to these services. The next potential milestone the Company is eligible to receive is $2,500 upon dosing the fifth patient in a Phase 1 clinical trial by Asana BioSciences. Included in accounts receivable as of March 31, 2019 was $15 related to the Asana agreement.

4. Fair value measurements

The following table presents information about the Company's assets and liabilities regularly measured and carried at a fair value and indicates the level within fair value hierarchy of the valuation techniques utilized to determine such value as of December 31, 2018. The Company had no assets and liabilities regularly measured and carried at a fair value as of March 31, 2019: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant

 

 

 

 

 

 

 

 

Quoted Prices

 

Other

 

Significant

 

 

 

 

 

in Active

 

Observable

 

Unobservable

 

 

Fair

 

Markets

 

Inputs

 

Inputs

 

    

Value

    

(Level 1)

    

(Level 2)

    

(Level 3)

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

  

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

$

10,497

 

$

10,497

 

$

 —

 

$

 —

 

 

$

10,497

 

$

10,497

 

$

 —

 

$

 —

There were no changes in valuation techniques or transfers between fair value measurement levels during the three months ended March 31, 2019 and 2018. As of March 31, 2019 and December 31, 2018, cash and cash equivalents were comprised of cash and money market funds.

14


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

5. Marketable securities

The following table summarizes marketable securities held December 31, 2018. The Company had no marketable securities as of March 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

    

Cost

    

Gains

    

Losses

    

Value

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

$

10,505

 

$

 —

 

$

(8)

 

$

10,497

 

 

$

10,505

 

$

 —

 

$

(8)

 

$

10,497

There were no realized gains or losses on available-for-sale securities during the three months ended March 31, 2019 and 2018.

6. Accrued expenses

Accrued expenses consisted of the following:

 

 

 

 

 

 

 

 

    

March 31, 

 

December 31, 

 

    

2019

 

2018

Accrued payroll and related expenses

 

$

1,532

 

$

3,042

Accrued preclinical, manufacturing and clinical expenses

 

 

5,341

 

 

8,314

Accrued professional fees

 

 

693

 

 

567

Accrued other

 

 

372

 

 

452

 

 

$

7,938

 

$

12,375

 

 

7. Earnings per share

The following table presents the calculation of basic and diluted net income per share:

 

 

 

 

 

 

 

 

 

Three months ended

 

    

March 31, 

 

 

 

2019

    

 

2018

Numerator:

 

 

 

 

 

 

Net income (loss)

 

$

21,901

 

$

(12,403)

Denominator:

 

 

 

 

 

 

Weighted-average number of shares - basic

 

 

30,299,650

 

 

22,816,521

Dilutive securities - share-based awards

 

 

1,052,730

 

 

 -

Dilutive securities - common stock warrants

 

 

109,316

 

 

 -

Weighted-average number of shares - diluted

 

 

31,461,696

 

 

22,816,521

 

 

 

 

 

 

 

Net income (loss) per share - basic

 

$

0.72

 

$

(0.54)

Net income (loss) per share - diluted

 

$

0.70

 

$

(0.54)

 

For the three months ended March 31, 2019 and 2018, basic earnings per share were computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

15


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

For the three months ended March 31, 2019, diluted earnings per share was computed using the "treasury method" by dividing the net income by the weighted-average number of shares of common stock and potentially dilutive securities outstanding during the period. The weighted-average number of shares of common stock were adjusted for the potential dilutive effect of the exercise of stock options and warrants to purchase common stock.

For the three months ended March 31, 2018, potentially dilutive securities were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive, therefore basic and diluted net loss per share were the same for the three months ended March 31, 2018.

Anti-dilutive stock-based awards excluded from the calculation of diluted EPS for the three months ended March 31, 2019 were 2,686,700.

8. Stockholders’ equity

Preferred stock

As of March 31, 2019 the Company had 25,000,000 shares of authorized preferred stock. No shares of preferred stock have been issued.

Common stock

The holders of the common stock are entitled to one vote for each share held. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors (the Board).

In March 2019, the Company completed a follow-on public offering in which the Company issued and sold an aggregate of 24,437,500 shares of its common stock at the public offering price of $4.00 per share, which included the exercise in full of the underwriters’ option to purchase additional shares of common stock. The net proceeds from the offering were $92,162.

At March 31, 2019 and December 31, 2018, there were 4,792,776 and 3,856,932 shares of common stock, respectively, reserved for the exercise of outstanding stock options and warrants.

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

 

    

2019

 

2018

 

Warrants

 

110,365

 

110,365

 

Stock options

 

4,682,411

 

3,746,567

 

 

 

4,792,776

 

3,856,932

 

At-the-market equity offering program

On July 2, 2018, the Company established an at-the-market equity offering program (ATM) pursuant to which it is able to offer and sell up to $75,000 of its common stock from time to time at prevailing market prices. As of March 31, 2019, the Company had not sold any shares under the ATM.

Warrants

In connection with a 2013 Series A-1 Preferred Stock issuance, the Company granted to certain investors warrants to purchase 129,491 shares of common stock. The warrants have a $0.05 per share exercise price and a contractual life of 10 years. The fair value of these warrants was recorded as a component of equity at the time of issuance. As of March 31, 2019, warrants to purchase 110,365 shares of common stock were outstanding.

16


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

9. Stock options

Stock option plans

In June 2017 the Company’s shareholders approved the 2017 Stock Incentive Plan (the 2017 Plan or the Plan).  Under the 2017 Plan, up to 2,255,000 shares of common stock may be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, restricted stock awards or other stock-based awards. The number of shares of common stock issuable under the Plan will be increased annually by 4% of the outstanding shares or such lesser amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the Plan. As of the adoption date of the 2017 Plan, there were 3,141,625 options outstanding under the Company’s 2007 Stock Incentive Plan (the 2007 Plan). Any cancellations under the 2007 Plan would increase the number of shares that could be granted under the 2017 Plan. In January 2019, the number of shares of common stock issuable under the Plan was increased by 929,378 shares. As of March 31, 2019 there were 2,066,390 shares available for future issuance under the Plan.

With respect to incentive stock options, the option price per share will equal the fair market value of the common stock on the date of grant, as determined by the Board, and the vesting period is generally four years. Nonqualified stock options will be granted at an exercise price established by the Board at its sole discretion (which has not been less than fair market value on the date of grant) and the vesting periods may vary. Options granted under the Plan expire no later than 10 years from the date of grant. The Board may accelerate vesting or extend the expiration of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.

A summary of the activity under the Plans is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

Remaining

 

 

 

 

 

Number

 

Average

 

Contractual Life

 

Aggregate

 

    

of Shares

    

Exercise Price

    

(in years)

    

Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

Options outstanding at January 1, 2019

 

3,746,567

 

$

6.58

 

7.6

 

$

3,897

Granted

 

1,058,833

 

 

3.61

 

 

 

 

  

Exercised

 

(12,192)

 

 

3.32

 

 

 

 

  

Cancelled

 

(110,797)

 

 

10.67

 

 

 

 

  

Options outstanding at March 31, 2019

 

4,682,411

 

$

5.82

 

7.8

 

$

7,918

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at March 31, 2019

 

2,215,137

 

$

4.00

 

6.5

 

$

5,688

 

 

 

 

 

 

 

 

 

 

 

The weighted-average grant date fair value of options granted during the three months ended March 31, 2019 and 2018, was $2.39 and $9.47 per share, respectively.

Cash received from the exercise of stock options was $42 and $255 for the three months ended March 31, 2019 and 2018, respectively.

Stock-based compensation

The Company uses the provisions of ASC 718, Stock Compensation, to account for stock-based awards.

The measurement date for employee awards is generally the date of grant. Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.

For the three months ended March 31, 2019 and 2018, the Company recorded stock-based compensation expense of $1,164 and $745, respectively. The Company had an aggregate of $11,059 of unrecognized stock compensation cost as of March 31, 2019 remaining to be amortized over the weighted-average period of 2.5 years. The fair value of each

17


 

Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

option award is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

    

March 31, 

 

 

 

 

2019

 

2018

 

 

Risk-free interest rate

 

2.6

%  

2.7

%

 

Expected dividend yield

 

 —

%  

 —

%

 

Expected term (years)

 

6.00

 

6.08

 

 

Expected stock price volatility

 

74

%  

73

%

 

Employee Stock Purchase Plan

During the year ended December 31, 2017, the Board adopted and the Company’s stockholders approved the 2017 employee stock purchase plan (the 2017 ESPP). The Company initially reserved 225,000 shares of common stock for issuance under the 2017 ESPP. In January 2019, the number of shares of common stock for issuance under the 2017 ESPP was increased by 232,344 shares. The Company did not issue any shares under the 2017 ESPP during the three months ended March 31, 2019 and 2018. As of March 31, 2019, there were 415,158 shares available for issuance under the 2017 ESPP.

10. Leases

The Company has an operating lease for its facility and operating and finance leases for certain equipment. The Company leases office space in Cambridge, MA under an operating lease, which was last amended in January 2018, and is effective through March 2021. The Company has an option to extend the lease term for an additional five years. This option to extend the lease term was not considered reasonably certain as of March 31, 2019. The Company has remaining lease terms of three years to five years for certain equipment, some of which may include options to purchase at fair value.

During the three months ended March 31, 2019, the Company entered into finance leases for certain equipment. The Company recorded assets under finance leases of $429 as property and equipment.

The components of lease expense were as follows:

 

 

 

 

 

 

Three months ended

 

 

March 31, 2019

Operating lease cost

 

$

540

 

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Table of Contents

Mersana Therapeutics, Inc.

Notes to condensed consolidated financial statements (continued)

(unaudited)

(in thousands, except share and per share data)

Supplemental balance sheet information related to leases was as follows:

 

 

 

 

 

 

Three months ended

 

 

March 31, 2019

Operating leases:

 

 

 

Operating lease right-of-use assets

 

$

3,944

Operating lease liabilities

 

 

2,005

Operating lease liabilities, net of current portion

 

 

2,375

 

 

 

 

Finance leases:

 

 

 

Property and equipment, gross

 

$

429

Other liabilities

 

 

83

Other liabilities, net of current portion

 

 

346

 

 

 

 

Weighted-average remaining lease term:

 

 

 

Operating leases

 

 

2.0 years

Finance leases

 

 

4.5 years

 

 

 

 

Weighted-average discount rate:

 

 

 

Operating leases

 

 

10.3%

Finance leases

 

 

6.9%

 

Supplemental cash flow information related to leases was as follows:

 

 

 

 

 

 

Three months ended

 

 

March 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

Operating cash flows from operating leases

 

$

514

Right-of-use assets obtained in exchange for lease obligations:

 

 

 

Operating leases

 

 

4,369

Finance leases

 

 

429

 

Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:

 

 

 

 

 

 

 

 

 

Operating leases

 

Finance leases

2019 (excluding the three months ended March 31, 2019)

    

$

1,757

    

$

87

2020

 

 

2,394

 

 

116

2021

 

 

687

 

 

116

2022

 

 

 —