Leerink ups Mersana Therapeutics to OP; holds PT at $14

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Leerink Partners upgraded Mersana Therapeutics (NASDAQ:MRSN) to “outperform” from “market perform” but maintained its price target of $14, citing the stock’s valuation. It closed at $6.04 on Nov. 13.

“We are upgrading our rating … on valuation as Mersana's stock is trading at historic lows, with an enterprise value of about $50-million,” writes analyst Jonathan Chang.

Mersana has developed a next-generation antibody-drug conjugate (ADC) platform, which holds the promise to generate ADCs with differentiated properties, compared with currently available agents.

Mr. Chang said the next important catalysts for the stock will be initial XMT-1536 (NaPi2b-targeting ADC) Phase 1 dose-escalation data in the first half of 2019 and potential XMT-1522 (HER2- targeting ADC) Phase 1 update in mid-2019.

“We continue to view Mersana as being led by an experienced and high quality management team with two programs advancing in Phase 1 clinical studies and updates from both programs expected within the next 12 months,” he said.

However, the Mersana story continues to “face obstacles moving forward especially as it relates to the competitive HER2 landscape and the ability to overcome Roche's past NaPi2b disappointments,” he added.

Mr. Chang believes investor sentiment, following the brief clinical hold placed on XMT-1522, which was subsequently lifted following amendments to the trial protocol, has depressed the stock to current levels. “We view upcoming data readouts as key to validating Mersana's clinical programs as well as the safety of the overall ADC platform,” he said.

Stephen Kilmer