Mersana Therapeutics Inc. attracted $27 million in Series A-1 financing for its Fleximer-based antibody-drug conjugate (ADC) pipeline. Riding the coattails of Adcetris' success, Mersana is hoping to develop the next generation of ADCs, addressing limitations of earlier iterations of the technology.

Mersana's conjugation technology combines the Fleximer polymer and a selection of customizable linker chemistries. The company is developing two small-molecule conjugates. XMT-1001 is in a Phase Ib extension trial in lung cancer, and XMT-1107 has entered a Phase I trial in advanced solid tumors.

However, Mersana will not be using its new funding to advance those candidates. Instead, the development of those drugs will be funded by partnerships.

Mersana licensed worldwide rights, excluding Japan, for XMT-1107 to Teva Pharmaceutical Industries Ltd., and it's looking for a partner for XMT-1001.

The new influx of cash will be used, instead, to kickstart that next-generation ADC technology.

Current ADC tech allows the use of full-length antibodies and two to four payload molecules per antibody. The entire complex must maintain water solubility while at the same time delivering highly potent payloads because of the small number of payload molecules that can be attached to the antibody.

Seattle Genetics Inc.'s Adcetris (brentuximab vedotin), for example, combines an anti-CD30 monoclonal antibody with a microtubule disrupting agent, monomethyl auristatin E (MMAE). It was the first ADC to gain approval. (See BioWorld Today, Aug. 22, 2011.)

ImmunoGen Inc. is developing drugs based on its targeted antibody payload technology (TAP). Its most advanced product, T-DM1 (trastuzumab emtamsine), links a cancer-killing agent with the HER2-binding antibody Herceptin (trastuzumab, Roche AG/Genentech).

Mersana's strategy is to use its fleximer polymer and linker chemistry to load and deliver a large number of drug molecules with a single antibody molecule. According to CEO Nicholas G. Bacopoulos, that opens the field to just about any drug mechanism for payload, even those that are not particularly water soluble.

"One of the goals here is to get a fleximer loaded with payload that will penetrate deep into a tumor," Bacapoulos told BioWorld Today.

Like the other ADC companies, Mersana also is capitalizing on its technology by licensing it to pharmaceutical partners. In March, it signed a potential $270 million collaboration with Endo Pharmaceuticals Inc. Under the agreement, Mersana will create ADCs based on Endo's antibodies for one target using the Fleximer polymer and custom linkers. There is an option to pursue two additional targets in the next two years.

Other companies in the ADC space have generated significant cash flow by helping pharma companies get in on the ground floor of the ADC trend. For example, ImmunoGen Inc. licensed its TAP technology to Eli Lilly and Co. for the development of a limited number of ADCs for cancer is 2011 for $20 million up front and $200 million in milestones. (See BioWorld Today, Dec 21, 2011.)

And Seattle Genetics has landed numerous licensing deals. Its 2011 deal with Abbott turned heads with an $8 million up-front payment for access to the technology for an internal oncology target, with a potential $200 million in milestone payments. (See BioWorld Today, March 23, 2011.)

That comfortable flow of cash means that companies like Mersana, ImmunoGen and Seattle Genetics can be selective about equity financing, using it to supplement licensing income for very early stage projects, technology development and other blue-sky applications.

"Existing ADC companies have really helped the field turn a corner. The new and improved technology will be in high demand," Bacapoulos said.

Mersana Chief Operating Officer Michael Metzger noted that Seattle Genetics' and ImmunoGen's technologies have been available to pharma companies for a couple of years already. "As it's become more validated, they've seen what the challenges are. . . . You can't do with existing technology what we can do with our technology."

Bacapoulos said Mersana is in the "feasibility" stage with its next-generation ADC technology, and that the company would be selecting targets in the near future.

The financing was led by New Enterprise Associates, with participation from Pfizer Venture Investments, Fidelity Biosciences, ProQuest Investments, Rho Ventures and Harris Group.

The funds are expected to last about three years. Bacapoulos noted that Mersana currently is engaged in business development activity that should "reduce cash requirements and enhance the options" for developing its own pipeline of drugs.

In other financings news:

• Cell Therapeutics Inc., of Seattle, completed a registered offering of 15,000 additional shares of Series 15 convertible preferred stock to an institutional investor. The stock is convertible into about 25.2 million shares of common stock at a price of $0.59495, plus warrants to purchase 16.8 million shares of common stock at an exercise price of $0.61344. Gross proceeds of the offering are $15 million. The first closing of $20 million Series 15 convertible preferred stock was completed in May. Net proceeds will be used to prepare for commercial launch of Pixuvri (pixantrone).

• CytomX Therapeutics Inc., of South San Francisco, added funds to its Series B round to bring the total to $41 million. Third Rock Ventures and the Roche Venture Fund joined with Canaan Partners leading the financing. At the same time, Canaan's Tim Shannon will join the company's board. Proceeds will support advancement of the company's pipeline of antibody therapeutics in the area of oncology, inflammation and other unmet needs. CytomX also will make use of the funds to execute business development activities toward formation of partnerships.

• Kinex Pharmaceuticals LLC, of Buffalo, N.Y., received a major investment from Manson Fok, of the University of Macau in Hong Kong. Fok also will assist Kinex in developing its Asian business strategy.