Everyone, my name is Maury Raycroft, and I'm one of the biotech analysts at Jefferies. With great pleasure, I'd like to welcome the CEO of Merus, Bill Lundberg. Thanks so much for joining us today, Bill, and we're going to do fireside chat format. Maybe for those who are new to the story, if you can give a brief intro to Merus. Sure. First and foremost, I wanted to thank you more than the entire team at Jefferies for the support you guys continue to provide. It's been a great partnership. It continues to be a really good collaboration, so we're really grateful for your support. Many of you know the Merus story. For those of you who don't, just briefly, Merus is a company that's been around for a number of years developing bispecific and multi-specific antibodies in cancer. We have a number of clinical stage candidates, one drug approved we could talk about if we have time, and foundational platform technology that has just been outstanding in developing a whole series of molecules that really can be medicines. The foundation of the technology is that we aim to make bispecific and multi-specific antibodies essentially like monoclonal antibodies, which allows us to stand on the decades of experience we have in fundamentally making medicines. We believe in making medicines. It's an immensely complex process. The more that we can rely on tried-and-true approaches, we don't have to reinvent every step along the way. We think it improves the chances of success. For example, we make fully human IgG1 antibodies, and essentially like monoclonal antibodies, we can make these in standard producer cell lines, use standard process development with additional steps, and really use global CDMO manufacturing capabilities to produce these. We can do large-scale screens with high-throughput analysis to let the biology select the best molecule for moving forward in the clinic. All of our antibodies have, as IgG1 molecules, the ability to fully engineer them as you would monoclonal antibodies that have proven to be so successful in making a large number of therapeutic antibodies that are now really important medicines. While all of this does not guarantee success in the clinic, we think it improves the chances of each of these really complex steps. At the end of the day, we really do have the opportunity to have a better chance of making a successful medicine. I have been really proud to see that that seems to be coming true, both with our approved medicine, Bizengri, which was approved late last year, and with just the outsized, unprecedented efficacy data and safety data we are seeing with our medicine, Petosemtamab, which is in clinical development in head and neck cancer. Got it. Yeah, that's a great intro. There's a lot of focus on Petosemtamab, but I'm glad you talked about the platform capabilities as well with making the natural IgG1 form of bispecifics, which led to the development of Peto. You just reported some data from that program, 43 patients' worth of data in combination with Keytruda. Maybe talk about the key highlights from that data update and how it compares and contrasts versus historical data. Absolutely. Petosemtamab has shown really striking and outsized results in head and neck cancer. Let me share first, Petosemtamab is our bispecific. It is a human IgG1 format that on one side binds EGFR, a common tumor antigen, and on the other side binds LGR5, a novel target in the cancer space. We set out in the laboratory a couple of years ago to try to ask the question, what can we add to EGFR-type binders on one side to really improve the activity against cancer models without substantially changing the profile or continuing to have a really good profile against normal tissue-derived models? What we discovered was Petosemtamab, this EGFR-LGR5 bispecific. What we've showed at ESMO Asia last year was that Petosemtamab has really striking activity as a single agent, as monotherapy in previously treated head and neck cancer, both in terms of response rate and in terms of progression-free survival and survival, substantively greater than what we would have expected for standard therapies alone in that setting. Now just recently at ASCO in 43 patients, it's a long windup to get to the question that you asked, really outsized and unprecedented efficacy in first-line treatment of head and neck cancer. Where this particular type of head and neck cancer is very difficult to treat, even with commonly used immunotherapy, you get responses in only about 20% of patients usually, and only about half the patients are alive. When we added our drug, Petosemtamab, to common immunotherapy, we had around 63% of patients responded, more than three times what we would have expected with immunotherapy, and an unprecedented 8 out of every 10 patients alive at the one-year mark. It's just really an outsized result, and this gives us high confidence in Petosemtamab in this setting. Got it. That's helpful. Now that you've made the ASCO disclosure, can you talk about how the data cut that you submitted in your breakthrough therapy designation application compared and contrasted with the phase two data set at ASCO? Did the FDA see the OS landmark or median PFS data in that update? The FDA granted Petosemtamab breakthrough therapy designation in the first-line setting with Petosemtamab given with pembrolizumab. That was the second breakthrough therapy designation for Petosemtamab. Previously, it had received breakthrough therapy designation in the single agent setting, in the second-line plus setting. Importantly, breakthrough therapy designation is the mechanism by which the FDA has to identify the most promising drugs and potentially prioritize them, those that they really feel can provide substantial benefit as compared to standard available therapies alone. What was so unusual about the breakthrough therapy designation that you're referring to was almost always when you have a combination therapy, the FDA says, we can't really tell which one of these components is contributing the outsized activity we're seeing. It is highly unusual for them to grant breakthrough therapy designation for a combination in the single-arm setting. The difference here was really the outsized and unprecedented effect on all of these endpoints: response rate, progression-free survival, and importantly, overall survival was just so dramatically higher than what one would have expected to the control therapy alone. Now, they saw the clinical data that we had provided them. It was an earlier data cut, but it did include all of these components. Got it. That's helpful. Based on the heat map for EGFR H-score in your data update, it seems as if patients with lower EGFR expression also showed high response rates to Peto and Pembro, but it's difficult to delineate between patients with medium and high EGFR expression based on the heat map. Wondering if you observe a correlation between response rate, depth of tumor regression, or durability with the EGFR scores. That's right. One of the really important observations of this data set is the consistency across patient populations and subsets, characteristics, ways of treating, et cetera. Even importantly, as you say, even across patients whose tumors do not express high levels of EGFR, we still saw really substantial responses. When we do an analysis to try to see a correlation, we can slice and dice the data in many ways. We do not see a strong, compelling correlation saying that responses only happen in the high-expressing patients with high EGFR-expressing tumors. We do see responses across the characteristics, and whether we look at response rate or other characteristics, that continues to hold up. Got it. Okay. We'll talk more about your ongoing phase threes, but just wondering on this point for the EGFR scores, what are your expectations for how phase three EGFR scores will compare to the phase two data set? Generally, what we've enrolled in our phase two population, we think is representative of what the overall population would be like across many characteristics, including the range of levels of EGFR expression on the tumors. We think it's going to be representative for what we'll see in the phase three trial and what one typically sees in the overall population. This is because we generally enroll in territories and geographies and at clinical trial sites that are similar from phase two to phase three. Got it. Okay. For LGR5 positivity, I don't know if you can comment more on that and whether you saw any correlation to efficacy based on LGR5. We did not share LGR5 expression in the tumors of the patients reported at ASCO this year. Part of that is because of the difficulty in measuring LGR5 expression in these cancers. Normally, you want to know what the protein level is with a test like immunohistochemistry. The reagents or the tools that we have for LGR5 expression just are not very good. We can measure RNA quite well. In previous presentations, we have reported RNA levels, but we have come to determine that RNA levels are not very predictive. That is to say, if a patient's tumor has LGR5 RNA, we are just not confident about the level of protein that could be there, which is why we do not feel comfortable providing an analysis around LGR5 levels. We have seen responses across LGR5 RNA levels, so we have not seen a correlation there. The extent to which RNA really represents how much protein is there, which is the thing that matters, we're not as comfortable leaning into. Got it. Going back to the results that you just recently reported, you had 79% overall survival at one year. If you look at that relationship between overall survival, close to 80% at one year, it correlates well with long median overall survival. We're projecting out that you could have greater than 30 months on median overall survival. Just wondering if that aligns with your internal projections for where this could track. Yeah, let me address a couple of comments here. The first is there's been some question about how well does survival at one year track with overall survival or median survival or how patients do long term. I will say that despite other people arguing to the contrary, just look across a large number of solid tumor oncology studies, one-year overall survival is the single best measure of how patients will survive long term. If you have a large number of patients who are alive and doing well at one year, as we do in our trial, and many of these patients are still on the study and on treatment, that is the single best predictor of doing well long term. Now, our median follow-up, the average, the middle amount of time we've followed patients is only 14.6 months. Talking about a 30-month data point, I'm much less comfortable talking about it. We just don't have any data there. Others have made similar projections to your 30-month plus month comment. Got it. Okay. Maybe talk about the median PFS that you showed in both HPV negative and positive patients. We're estimating about nine months on average for PFS for Peto plus Pembro. Is that the right number that investors should be putting in their model for durability? Yeah, and then wondering if there's anything else you're saying on just what patients are going on to post-progression. Okay, so that's four different topics. If I forget one, remind me. With respect to what we are observing in the different populations of HPV, sorry, of head and neck cancer, HPV associated or HPV positive and HPV negative, we have commented that we see the outcomes of these patients as being quite similar. When we analyze overall response rate and progression-free survival in the overall population as compared to the HPV negative population, we see those numbers as very, very similar, slightly better in the HPV negative population. The reason I'm not leaning into the HPV positive numbers specifically is we only have eight patients, so to start to try to make claims about that is less statistically secure. But we see HPV negative in this context as performing a little bit better. When you look carefully at studies specifically around immunotherapy in head and neck cancer, and again, here in contrast to what you may be hearing from others, I would refer you to the Zhang et al. meta-analysis in 2022, which clearly says that response rate and overall survival are essentially similar, whether the tumor is HPV driven or HPV positive or HPV negative. This is just a really important point that there's debate around here, but the data really support this notion that these outcomes are very, very similar. We treat this as one population for the purposes of our clinical development program. The last five registration trials that have studied head and neck cancer have treated the entire population and not broken out subsets. In all of our discussions with regulatory authorities and our two breakthrough therapy designations, they've been for the entire population, and a careful analysis has not led one to need to break out any subsets along these lines. It is just a really important grounding. Coming to PFS, we did report median PFS of nine months. We did say that the HPV negative PFS is numerically slightly higher, but these are small numbers overlapping confidence intervals. It is hard to say that anything is really different in that regard. In terms of how long patients will be on treatment for the purpose of a commercial model, for example, there is a difference between median, which is the middle value, and the average time on treatment, which is important because what you want to think about is the average time on treatment or the mean duration. It is just a really important distinction. I'm sure there are two other questions I forgot to answer here. I think you covered most of the points, and you bring up an interesting point where there's debate on whether the HPV positive patients could be driving the durable benefit that you're seeing in the results, but you're saying that that's not the case, that those eight patients, it's probably too small of numbers, and you're seeing longer durability in the HPV negative. Just to clarify on that point. Both of those are spot on. It's a very small number of HPV positive patients, and we see longer numbers in the HPV negative population as compared to the overall population. Got it. Okay. Let's pivot and talk about your ongoing registrational studies in head and neck cancer. Talk about scenarios for enrollment for the two different phase threes and also the interim analyses and key requirements needed to trigger the interim analyses for each study. Enrollment, interim, and key requirements. Okay, I got it. The enrollment has been going very well. What we've been saying all along, from even before we started, was the best early metric for how registration trials go, how large trials go, is how quickly you get sites and countries active in enrolling. You all can see very clearly how we're doing. You can look on clinicaltrials.gov and see the number of sites that we have for both of our first line and second and third line registration studies. We have more than 125 sites in both trials. That is a really good rate of site activation. Once you get above 100 trial sites, that's when enrollment really picks up and accelerates. Based on the early site activation around the end of the year, we were able to guide both trials. We expect to be substantially enrolled by year-end. Now, based on the progress we're making and the uptake in enrollment, we've also been able to guide just recently to be able to add that we expect one or both of these trials, top-line readout, top-line results next year. Got it. Yeah, that's helpful. For the phase three interims, when you get to the end of this year, will you be able to provide more clarity on which study could read out first or whether both studies could read out first? What are your thoughts on that? We generally, I mean, we were just joking about this before we started this conversation. We generally don't guide on what we'll guide. So I can't answer that question. Fair enough. Anything more you can say about the proportion of patients that you would need for the interim analysis or how investors should think about that? Both trials are designed similarly, and we should think of each trial as a separate train going down a separate track. They stand independently. They follow what's called a Project FrontRunner format, which is a new initiative at the FDA that in the context of a randomized registration trial, these trials can be eligible for potential accelerated approval based on an early endpoint, such as overall response rate, with confirmation and converting the accelerated approval to regular traditional or sometimes called full approval based on the survival of the same trial. Our trials have two efficacy endpoints. One is overall response rate, which is evaluated at the interim analysis, and the other is a final survival analysis that's evaluated at the end of the trial. Now, importantly, this is all based on direct conversations we've had at the FDA, and the FDA has made public comments about this, and other companies have talked about this as well. Now, importantly, when the FDA talks about overall response rate, what they really mean is a couple of things. One is confirmed overall response rate, so two scans, a second scan confirming the response. The second is they want to know that the responses last for a period of time, which in other recent approvals has been around six months. They just want to know that these responses are likely, reasonably likely to predict clinical benefit, that they can't just be fleeting response and then disappear. They will be looking at all of that. In addition, in this context of Project FrontRunner, there's been a discussion around the interest in them looking at is survival trending the right way, not a full statistically significant look at survival, but is it heading the right direction? There is a very small amount of the P-value that gets allocated to that look as well. In the interim analysis, just to be clear, it's a look at ORR that will be taken at a time when we have enough follow-up from those patients. At the same time, we would expect a small look at overall survival. Coming back to your question, what I've said is if we were to wait until all the patients had ORR response rate data, that would be vastly, vastly overpowered. I've pointed to the first trial to get approval under the Project FrontRunner framework, the Breakwater trial of Braftovi, which was the results announced in December and converted to regular approval just a week ago. That trial received accelerated approval based on the ORR analysis of the first 110 patients per arm. That did not need full ORR from the entire population for accelerated approval in that context. Got it. So that's a good reference for investors to think about. Yes. There is interest in which study could read out first. You started the second line, third line study first, but maybe the front line study, because there could be more patients out there looking for treatment, maybe that goes faster. I guess how do you think about just the rate of enrollment for both of these studies? We haven't guided one way or the other in terms of the different trials. Okay, understood. You're currently enrolling at, I think you said, over 125 sites? Yes. For each study. KEYNOTE-048 took about 200 sites to enroll 882 patients in 20 months. How many additional total sites do you think you're going to need for these studies? We did not originally project a large number of sites again because site number and rate of site activation is the single best predictor of how your trial is going to go. This really comes from the seasoned experience of my team, my Chief Medical Officer,, and my COO, and just the team who has been executing on all of this. We are well ahead of our projections. Based on our projections, we needed a substantial number more sites. We are continuing to activate sites at a rapid clip. We still remain very keen on getting to our original target of sites, even though site activation is well ahead of where we were thinking we were going. We are not done yet, but we do have line of sight on the number of sites we think we will need. Got it. Maybe last question with the phase three is just based on FDA's regulatory flexibility under breakthrough therapy designation, could you potentially file for accelerated approval in both the front line and second line, third line settings using the interim analysis from just the front line pivotal? Breakthrough therapy designation does allow for a higher degree of engagement for us sponsors with the FDA and the ability to talk about programs like this and where we are with enrollment and the data and opportunities. We're not changing our framework or guidance around each of these trials is under sort of separate trains going down separate tracks under the Project FrontRunner framework. We do think it is very helpful to have breakthrough therapy designation for this flexibility. Got it. And so you've got the one or both phase threes ready on next year, which is going to be a big event. Before that, you've got colorectal cancer data, second half of this year. Want to talk about how you're setting expectations there for number of valuable patients from the different settings there and the amount of follow-up that you could have as well. Petosemtamab was originally discovered in colorectal cancer models. What we pulled out of that screen trying to find the best drug was this bispecific that targeted on one side, EGFR, a well-known and established therapeutic target in colorectal cancer, and LGR5, a novel target, but whose biology is very well worked out both in the colon developmental biology and in colon cancer. We think if our drug should work anywhere, colon cancer would be the right place to look. We're really looking forward to having the data. I do want to remind everyone our original dose escalation efforts did not show any responses in colorectal cancer. We have both the phase one dose escalation experience and a review article on the mechanism of action on our website and I'd refer everyone to those papers to review the basic background. We're now running a series of cohorts in colorectal cancer and looking to see if we can see a signal of activity in what we think is a much more appropriate population, first line in combination with chemo, second line in combination with chemo, and third line as monotherapy. We've guided we'll provide a clinical update later this year for that data set. Anything more you can say about where you're at with enrollment for those three different cohorts and how many patients were the data you could have in the update? We started the second line cohort mid last year, the third line and the first line cohorts around the end of last year. We've been enrolling as aggressively or quickly as we can, but all three cohorts are still enrolling. We haven't completed enrollment of any of them. We are still working hard to get the patients that we want to provide. Got it. Okay. Historically, you've shown about 20 patients per cohort. I would say it the other way around. Historically, our target enrollment for the cohorts have been around 20 patients or sometimes 40 or more, depending if there's a clinical question we want to add. Here, we've done it the other way around. We're committing to sharing data even long before we know how the enrollment was going to end up. Got it. Okay. That's helpful. Maybe talk about patient baseline characteristics for this study in colorectal cancer versus the initial phase one dose escalation study and also versus J&J's Origami One. The baseline characteristics in the current cohorts reflect the setting we think is the best chance to see a signal with Petosemtamab, which is genetically wild type. For the first line and second line cohorts, no prior anti-EGFR antibody. We think that gives us the best chance to see if our drug really can work very well in colorectal cancer. In third line, it is also genetically wild type, but we would anticipate those patients have seen or are EGFR antibody experienced. J&J are developing a medicine called Amivantamab in colorectal cancer, and they have shown a population of around 45 patients in a similar setting in first line and second line colorectal cancer, and also as monotherapy in third line colorectal cancer. Got it. For this update, what do you want to show on response rate? I guess what's the bar for success for you to make a go, no-go decision and whether you want to move into a phase three? I mean, I think importantly, you know, showing clinical activity of our drug in combination with chemotherapy in the first two line settings or in monotherapy is really important because we need to have conviction to continue to move forward. I think we have the opportunity to do so with the way that we've designed these cohorts. There's going to be a lot of conversation, a lot of discussion about how do we compare and how good is good. I think the important piece is let's show the activity and provide the data to all of you. Got it. Is there a particular setting that you're most excited about to turn over the cards on as it relates to just showing proof of concept for Petosemtamab? I mean, I think in colorectal cancer you're talking about. Yeah, I mean, I think, you know, this is the place where we originally designed the molecule and we thought this would be the best opportunity for our drug. Running the right experiment in this population is the thing that we really want to do. Got it. Kind of a mechanistic question, Amivantamab showed 53% response rate on intrahepatic lesions in CRC. Do you think Peto's mechanism leveraging EGFR internalization on LGR5 positive cancer cells can generate as good or better data? I think Petosemtamab's mechanism is incredibly promising. Again, I'd refer everyone to the paper, Mechanism of Action paper on our website. It's hard to summarize it in just the remaining 60 seconds. It is a really exciting and novel target, novel biology, and potentially a wholly new way of treating cancer, not only head and neck cancer, but potentially also colorectal cancer. I think we're really looking forward to sharing the data. Got it. If the colorectal cancer data is positive, are there other settings that you could pursue with Petosemtamab? Now that you've got clear front line durability data in hand, I guess could this accelerate BD conversations for the program? We believe Petosemtamab is a drug in head and neck cancer. We really do. It's high confidence given the strength of the data that we've seen in head and neck cancer. The question for us is just how important, how big can this medicine be, both for Merus as a company and for the broader population at large? That's the real question we want to now turn to. Got it. Makes sense. For head and neck cancer, wondering if you would do another data update from the phase two later this year. We're a company that doesn't typically slice our data very frequently. We don't look after every patient to see what's going on. Typically, our updates have been annually or less frequent. We have been asked around the durability just because the PFS and, importantly, the overall survival has been just so compellingly substantially greater than what's been seen historically with immunotherapy alone. I think there is reason to consider a potential additional information from this cohort over time, but we haven't guided anything specifically here. Got it. Makes sense. We're out of time. Maybe in closing, congrats on the financing that you did recently. Maybe talk about what the pro forma cash runway looks like and highlight key events that investors should be focused on in the next 6 to 12 months. As of the last quarter close, we had $638 million. We have completed a financing of $300 million additional. This is a robust balance sheet that strongly supports our two phase three registration trials. In terms of next things to pay attention to, we've guided we'll provide the initial clinical look at colorectal cancer later this year, top line readout of registration trials, one or both of them next year. Those are the key events to look forward to. It'll be a busy coming year. Got it. Okay. Thanks so much, both, for joining us today. Thanks as always.