Mersana Therapeutics (MRSN) 10-Q 6 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Document and Entity Information
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	Mersana Therapeutics, Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		47,883,522
Entity Central Index Key	0001442836
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 58,196	$ 59,634
Short-term marketable securities	53,806	10,497
Accounts receivable	298	459
Prepaid expenses and other current assets	2,397	3,715
Total current assets	114,697	74,305
Property and equipment, net	2,446	2,694
Operating lease right-of-use assets	3,059
Other assets	1,453	1,503
Total assets	121,655	78,502
Current liabilities:
Accounts payable	7,304	10,727
Accrued expenses	8,037	12,375
Deferred revenue	4,646	46,196
Operating lease liabilities	2,145
Short-term debt	167
Other liabilities	85	127
Total current liabilities	22,384	69,425
Operating lease liabilities	1,257
Long-term debt, net	4,670
Other liabilities	299	282
Total liabilities	28,610	69,707
Commitments (Note 11)
Stockholders' equity
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
Common stock, $0.0001 par value; 175,000,000 shares authorized; 47,882,897 and 23,234,472 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	5	3
Additional paid-in capital	269,140	172,966
Accumulated other comprehensive income (loss)	28	(8)
Accumulated deficit	(176,128)	(164,166)
Total stockholders’ equity	93,045	8,795
Total liabilities and stockholders’ equity	$ 121,655	$ 78,502

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	47,882,897	23,234,472
Common stock, shares outstanding	47,882,897	23,234,472

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Condensed Consolidated Statements of Operations and Comprehensive Loss
Collaboration revenue	$ 844	$ 2,151	$ 42,081	$ 9,405
Operating expenses:
Research and development	13,701	15,180	42,610	40,098
General and administrative	4,436	4,380	13,072	12,181
Total operating expenses	18,137	19,560	55,682	52,279
Other income (expense):
Interest income	608	340	1,785	1,049
Interest expense	(107)		(146)
Total other income (expense), net	501	340	1,639	1,049
Net loss	(16,792)	(17,069)	(11,962)	(41,825)
Other comprehensive loss:
Unrealized gain on marketable securities	17	48	36	107
Comprehensive loss	(16,775)	(17,021)	(11,926)	(41,718)
Net loss attributable to common stockholders - basic	(16,792)	(17,069)	(11,962)	(41,825)
Net loss attributable to common stockholders - diluted	$ (16,792)	$ (17,069)	$ (11,962)	$ (41,825)
Net loss per share attributable to common stockholders — basic and diluted (in dollars per share)	$ (0.35)	$ (0.74)	$ (0.28)	$ (1.82)
Weighted-average number of common shares used in net loss per share attributable to common stockholders — basic and diluted	47,833,607	23,152,019	42,011,340	22,979,516
Type of Revenue	mrsn:CollaborationMember	mrsn:CollaborationMember	mrsn:CollaborationMember	mrsn:CollaborationMember

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) $ in Thousands	Common stock	Additional paid-in capital	Accumulated other comprehensive income/(loss)	Accumulated deficit	Total
Balance at beginning of period (in shares) at Dec. 31, 2017	22,765,017
Balance at beginning of period at Dec. 31, 2017	$ 3	$ 168,018	$ (149)	$ (97,878)	$ 69,994
Increase (Decrease) in Stockholders' Equity
Cumulative effect adjustment for adoption of ASC 606				(2,031)	(2,031)
Exercise of stock options (in shares)	104,945
Exercise of stock options		255			255
Stock-based compensation expense		745			745
Other comprehensive income (loss)			(13)		(13)
Net (loss) income				(12,403)	(12,403)
Balance at end of period (in shares) at Mar. 31, 2018	22,869,962
Balance at end of period at Mar. 31, 2018	$ 3	169,018	(162)	(112,312)	56,547
Balance at beginning of period (in shares) at Dec. 31, 2017	22,765,017
Balance at beginning of period at Dec. 31, 2017	$ 3	168,018	(149)	(97,878)	69,994
Increase (Decrease) in Stockholders' Equity
Cumulative effect adjustment for adoption of ASC 606					(2,031)
Net (loss) income					(41,825)
Balance at end of period (in shares) at Sep. 30, 2018	23,160,875
Balance at end of period at Sep. 30, 2018	$ 3	171,627	(42)	(141,735)	29,853
Balance at beginning of period (in shares) at Mar. 31, 2018	22,869,962
Balance at beginning of period at Mar. 31, 2018	$ 3	169,018	(162)	(112,312)	56,547
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	247,776
Exercise of stock options		470			470
Stock-based compensation expense		958			958
Other comprehensive income (loss)			72		72
Net (loss) income				(12,354)	(12,354)
Balance at end of period (in shares) at Jun. 30, 2018	23,117,738
Balance at end of period at Jun. 30, 2018	$ 3	170,446	(90)	(124,666)	45,693
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	43,137
Exercise of stock options		128			128
Stock-based compensation expense		1,053			1,053
Other comprehensive income (loss)			48		48
Net (loss) income				(17,069)	(17,069)
Balance at end of period (in shares) at Sep. 30, 2018	23,160,875
Balance at end of period at Sep. 30, 2018	$ 3	171,627	(42)	(141,735)	29,853
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	31,411
Exercise of stock options		65			65
Purchase of common stock under ESPP (in shares)	42,186
Purchase of common stock under ESPP		146			146
Stock-based compensation expense		1,128			1,128
Other comprehensive income (loss)			34		34
Net (loss) income				(22,431)	(22,431)
Balance at end of period (in shares) at Dec. 31, 2018	23,234,472
Balance at end of period at Dec. 31, 2018	$ 3	172,966	(8)	(164,166)	8,795
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	12,192
Exercise of stock options		42			42
Issuance of common stock under public offering, net of issuance costs (in shares)	24,437,500
Issuance of common stock under public offering, net of issuance costs	$ 2	92,160			92,162
Stock-based compensation expense		1,164			1,164
Other comprehensive income (loss)			8		8
Net (loss) income				21,901	21,901
Balance at end of period (in shares) at Mar. 31, 2019	47,684,164
Balance at end of period at Mar. 31, 2019	$ 5	266,332		(142,265)	124,072
Balance at beginning of period (in shares) at Dec. 31, 2018	23,234,472
Balance at beginning of period at Dec. 31, 2018	$ 3	172,966	(8)	(164,166)	$ 8,795
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)					58,964
Net (loss) income					$ (11,962)
Balance at end of period (in shares) at Sep. 30, 2019	47,882,897
Balance at end of period at Sep. 30, 2019	$ 5	269,140	28	(176,128)	93,045
Balance at beginning of period (in shares) at Mar. 31, 2019	47,684,164
Balance at beginning of period at Mar. 31, 2019	$ 5	266,332		(142,265)	124,072
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	32,693
Exercise of stock options		58			58
Purchase of common stock under ESPP (in shares)	82,281
Purchase of common stock under ESPP		283			283
Stock-based compensation expense		1,161			1,161
Other comprehensive income (loss)			11		11
Net (loss) income				(17,071)	(17,071)
Balance at end of period (in shares) at Jun. 30, 2019	47,799,138
Balance at end of period at Jun. 30, 2019	$ 5	267,834	11	(159,336)	108,514
Increase (Decrease) in Stockholders' Equity
Exercise of stock options and warrants (in shares)	83,759
Exercise of stock options and warrants		21			21
Stock-based compensation expense		1,285			1,285
Other comprehensive income (loss)			17		17
Net (loss) income				(16,792)	(16,792)
Balance at end of period (in shares) at Sep. 30, 2019	47,882,897
Balance at end of period at Sep. 30, 2019	$ 5	$ 269,140	$ 28	$ (176,128)	$ 93,045

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)
Consolidated Statements of Convertible Preferred Stock and Stockholders’ (Deficit) Equity
Issuance costs	$ 5,587

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net loss	$ (11,962)	$ (41,825)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	963	907
Loss on disposal of fixed assets		20
Net amortization of premiums and discounts on investments	(87)	(288)
Stock-based compensation	3,610	2,756
Non-cash rent expense		77
Non-cash interest expense	65
Changes in operating assets and liabilities:
Accounts receivable	161	198
Prepaid expenses and other current assets	1,318	(1,379)
Other assets		(1,433)
Accounts payable	(3,102)	3,619
Accrued expenses	(4,518)	3,568
Operating lease assets and liabilities	(66)
Deferred revenue	(41,550)	(5,532)
Net cash used in operating activities	(55,168)	(39,312)
Cash flows from investing activities
Maturities of marketable securities	10,500	74,565
Purchase of marketable securities	(53,688)
Purchase of property and equipment	(605)	(1,093)
Net cash provided by (used in) investing activities	(43,793)	73,472
Cash flows from financing activities
Net proceeds from public offering of common stock	92,162
Proceeds from exercise of stock options	121	853
Proceeds from purchases of common stock under ESPP	283
Proceeds from issuance of debt, net of issuance costs	4,965
Payments under capital lease obligations	(58)
Net cash provided by financing activities	97,473	853
Increase (decrease) in cash, cash equivalents and restricted cash	(1,488)	35,013
Cash, cash equivalents and restricted cash, beginning of period	60,005	26,962
Cash, cash equivalents and restricted cash, end of period	58,517	61,975
Supplemental disclosures of non-cash activities:
Purchases of property and equipment included in accounts payable and accrued expenses		75
Debt financing costs in accrued expenses	180
Cash paid for interest	64
Property and equipment acquired under finance leases	$ 429
Adjustment to accumulated deficit and deferred revenue upon adoption of Topic 606		$ 2,031

Nature of business and basis of

Nature of business and basis of presentation	9 Months Ended
	Sep. 30, 2019
Nature of business and basis of presentation
Nature of business and basis of presentation	1. Nature of business and basis of 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 a first-in-class, wholly-owned Dolaflexin ADC targeting NaPi2b, an antigen broadly expressed in ovarian cancer and non-small cell lung cancer (NSCLC) adenocarcinoma. In August 2019, the Company announced the dosing of the first patient in the expansion portion of the Phase 1 study of XMT-1536. The expansion cohorts will assess the efficacy, safety and tolerability of XMT-1536 at 36 mg/m 2 every four weeks in patients with platinum-resistant ovarian cancer and non-small cell lung cancer (NSCLC) adenocarcinoma. The Company has not yet determined a maximum tolerated dose, and it plans to continue the dose escalation portion of the study in parallel. 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, decided to discontinue the development of XMT-1522, which was then being studied in the dose escalation portion 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. For the nine months ended September 30, 2019, the net loss was $11,962, compared to $41,825 in the nine months ended September 30, 2018. The difference year over year is primarily attributable to $39,965 in revenue that was recognized in the first quarter of 2019 as a result of the discontinuation of the partnership with Takeda in the first quarter of 2019. The Company did not recognize any revenue related to the collaboration agreements with Takeda in the second or third quarter of 2019 and does not expect to have any further revenue related to these agreements. Cash used in operations was $55,168 for the nine months ended September 30, 2019 and $39,312 for the nine months ended September 30, 2018. The Company expects to continue to incur operating losses and negative operating cash flows for the foreseeable future. As of September 30, 2019, the Company had an accumulated deficit of $ 176,128 . 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 operating 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 cash, cash equivalents, and marketable securities, as of September 30, 2019, will enable it to fund its operating plan through at least mid-2021. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding. 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 consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of September 30, 2019, the results of its operations for the three and nine months ended September 30, 2019 and 2018, a statement of stockholders’ equity for the nine months ended September 30, 2019 and 2018 and cash flows for the nine months ended September 30, 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 and nine months ended September 30, 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.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2019
Summary of Significant Accounting Policies
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 and nine months ended September 30, 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. 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: Nine months ended Nine months ended September 30, 2019 September 30, 2018 Beginning End Beginning End of period of period of period of period Cash and cash equivalents $ 59,634 $ 58,196 $ 26,591 $ 61,604 Restricted cash included in other assets, noncurrent 371 321 371 371 Total cash, cash equivalents and restricted cash per statement of cash flows $ 60,005 $ 58,517 $ 26,962 $ 61,975 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 debt securities are included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Realized gains and losses and declines in value judged to be other than temporary are included as a component of other income (expense), net, based on the specific identification method. When determining whether a decline in value is other than temporary, the Company considers various factors, including whether the Company has the intent to sell the security, and whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis. Fair value is determined based on quoted market prices. Other Assets The Company recorded other assets of $1,453 and $1,503 as of September 30, 2019 and December 31, 2018, respectively, comprised of restricted cash of $321 and $371, respectively, held as security deposits for a standby letter of credit and $1,132 at the end of each period held by a service provider. Net Loss per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the diluted net loss per share calculation, convertible preferred stock, warrants to purchase common stock and options to purchase common stock are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares): Three and nine months ended September 30, 2019 2018 Warrants 39,474 110,365 Restricted stock units 447,336 — Stock options 4,718,597 3,661,962 5,205,407 3,772,327 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 has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less. 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 lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. The Company has 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. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. Currently, U.S. GAAP delays recognition of the full amount of credit losses until the loss is probable of occurring. Under this ASU, the income statement will reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses will be based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down of the security. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2016-13 may have on its financial position and results of operations.

Collaboration agreements

Collaboration agreements	9 Months Ended
	Sep. 30, 2019
Collaboration agreements
Collaboration agreements	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 for the milestone is fully constrained until it is certain the milestone would be achieved. 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 as the Company will satisfy the performance obligations as the research and development services are performed. 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 approximates 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. As of December 31, 2018, the total transaction price for the Merck KGaA Agreement was $22,070, which represents the amount of consideration the Company is expected to receive for the transfer of goods and services to Merck KGaA. For each of the three and nine months ended September 30, 2019, the Company decreased the fees expected to be received for research and development activities by $570 to $6,500, resulting in a revised total transaction price for the Merck KGaA Agreement of $21,500 as of September 30, 2019. For the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, the Company recorded collaboration revenue of $800, $1,482, $836 and $2,426, respectively, related to its efforts under the Merck KGaA Agreement. During the three and nine months ended September 30, 2019, the Company recognized collaboration revenue and corresponding research and development expense of $34 and $1,255, respectively, related to the Merck KGaA Supply Agreement. Included in accounts receivable as of September 30, 2019 and December 31, 2018 were $262 and $450, respectively, related to the Merck KGaA Supply Agreement. As of September 30, 2019, the Company had $4,646 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 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. The Company did not recognize any revenue related to the XMT-1522 Agreement or the 2016 Restated Agreement in the second quarter and will not have any further revenue related to these agreements. Included in accounts receivable as of September 30, 2019 and December 31, 2018 was $26 and $9, respectively, related to the Takeda agreements. Included in accounts payable as of September 30, 2019 and December 31, 2018 was $2,754 and $2,749, respectively, related to the Takeda agreements. Summary of Contract Assets and Liabilities The following table presents changes in the balances of our contract assets and liabilities during the nine months ended September 30, 2019 and 2018: Balance at Beginning Balance at of Period Additions Deductions End of Period Nine months ended September 30, 2019 Contract assets $ — $ — $ — $ — Contract liabilities: Deferred revenue $ 46,196 $ — $ 41,550 $ 4,646 Balance at Beginning Balance at of Period Additions Deductions End of Period Nine months ended September 30, 2018 Contract assets $ — $ — $ — $ — Contract liabilities: Deferred revenue $ 52,439 $ 2,373 $ 7,906 $ 46,906 During the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, 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 Nine months ended September 30, September 30, 2019 2018 2019 2018 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ 834 $ 1,760 $ 41,550 $ 7,515 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 September 30, 2019 and 2018 and nine months ended September 30, 2019 and 2018, the Company recognized revenue of $10, $587, $25 and $782, respectively, related to these services. In addition, during the nine months ended September 30, 2018, the Company recognized revenue of $1,500 related to a milestone achieved upon the completion of a GLP toxicology study by Asana BioSciences. The Company did not recognize any revenue related to milestones in the three and nine months ended September 30, 2019. 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. As of September 30, 2019, the Company considers this next milestone to be fully constrained as there is considerable judgment involved in determining whether it is probable that a significant revenue reversal would occur. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestone is outside the control of the Company and there is a high level of uncertainty in achieving this milestone, as this would require initiation of clinical trials by the collaboration partner. The Company reevaluates the probability of achievement of a milestone subject to constraint at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Fair value measurements

Fair value measurements	9 Months Ended
	Sep. 30, 2019
Fair value measurements
Fair value measurements	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 September 30, 2019 and December 31, 2018: Significant Quoted Prices Other Significant in Active Observable Unobservable Fair Markets Inputs Inputs Value (Level 1) (Level 2) (Level 3) September 30, 2019 Marketable securities: Commercial paper $ 14,871 $ — $ 14,871 $ — Corporate bonds 12,010 — 12,010 — U.S. Treasuries 26,925 — 26,925 — $ 53,806 $ — $ 53,806 $ — 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 $ — $ — The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities. There were no changes in valuation techniques or transfers between fair value measurement levels during the nine months ended September 30, 2019 and 2018. As of September 30, 2019, and December 31, 2018, cash and cash equivalents were comprised of cash and money market funds. There were no changes in valuation techniques or transfers between fair value measurement levels during the nine months ended September 30, 2019 and 2018. Cash and Cash Equivalents The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities. As of September 30, 2019, and December 31, 2018, cash and cash equivalents were comprised of cash and money market funds. Marketable Securities Marketable securities classified as Level 2 within the valuation hierarchy generally consist of U.S. treasury securities, corporate bonds and commercial paper. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields and other observable inputs. The Company validates the prices provided by its third-party pricing sources by obtaining market values from other pricing sources and analyzing pricing data in certain instances. As of September 30, 2019, the carrying value of the Company’s outstanding borrowing under the Credit Facility approximates fair value (a Level 2 fair value measurement), reflecting interest rates currently available to the Company. The Credit Facility is discussed more detail in Note 7, “Debt”.

Marketable securities

Marketable securities	9 Months Ended
	Sep. 30, 2019
Marketable securities
Marketable securities	5. Marketable securities The following table summarizes marketable securities held at September 30, 2019 and December 31, 2018: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2019 Commercial paper $ 14,871 $ — $ — $ 14,871 Corporate bonds 11,984 26 — 12,010 U.S. Treasuries 26,923 2 — 26,925 $ 53,778 $ 28 $ — $ 53,806 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

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2019
Accrued expenses
Accrued expenses	6. Accrued expenses Accrued expenses consisted of the following: September 30, December 31, 2019 2018 Accrued payroll and related expenses $ 3,080 $ 3,042 Accrued preclinical, manufacturing and clinical expenses 4,017 8,314 Accrued professional fees 710 567 Accrued other 230 452 $ 8,037 $ 12,375

Debt

Debt	9 Months Ended
	Sep. 30, 2019
Debt
Debt	7. Debt On May 8, 2019, the Company entered into a loan and security agreement (the Credit Facility) with Silicon Valley Bank (SVB) pursuant to which the Company can borrow, at its option, up to $20,000, in up to four principal advances of at least $5,000 each (each, a Term Loan or collectively, the Term Loans) through August 31, 2020. The Company drew $5,000 on the Term Loan upon execution of the Credit Facility. The Term Loans bear interest at a floating per annum rate equal to the greater of (i) 4.0% and (ii) 1.50% below the Prime Rate, as defined. The Company is obligated to make monthly interest only payments on each outstanding Term Loan commencing on the first calendar day of the month following the funding date of such Term Loan and continuing on the first calendar day of each month thereafter through August 31, 2020. Commencing on September 1, 2020 and continuing on the first calendar day of each month thereafter, the Company is obligated to make 30 consecutive equal payments of principal, together with applicable interest in arrears to SVB. All outstanding principal and accrued and unpaid interest with respect to the Term Loans are due and payable in full on February 1, 2023. Upon repayment of the Term Loans, the Company is also required to make a final payment to SVB equal to 5.0% of the principal amount of the Term Loans then extended to the Company. This final payment is accreted under the effective interest method over the life of each loan. The Term Loans are secured by substantially all of the Company’s assets, except for its intellectual property which is subject to a negative pledge, and certain other customary exclusions. At the Company’s option, it may prepay the outstanding principal balance of any Term Loans in whole but not in part, subject to a prepayment fee of: (a) 3.0% of the Term Loans then extended to the Company if the prepayment occurs on or prior to May 8, 2020, (b) 2.0% of the Term Loans then extended to the Company if the prepayment occurs after May 8, 2020 but on or prior to May 8, 2021, or (c) 1.0% of the Term Loans then extended to the Company if the prepayment occurs after May 8, 2021 but before February 1, 2023. In the event the Company has not borrowed a total of $20,000 upon the earlier of August 21, 2020, acceleration of the Company’s payment obligations or Company’s prepayment of the then extended Term Loans, the Company is required to pay an additional fee equal to 3.0% of any unborrowed portion of the committed funding (the Unused Term Loan Commitment Fee). The Credit Facility includes customary affirmative, financial, and restrictive covenants applicable to the Company. Affirmative covenants include, among others, covenants requiring the Company to maintain its corporate existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. Financial covenants include maintaining a liquidity ratio (as defined in the Credit Facility) of 1.50 to 1.00. The restrictive covenants include, among others, requirements relating to the Company’s ability to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets and agree to a change in control, in each case subject to certain customary exceptions. The Company’s payment obligations under the Credit Facility are subject to acceleration upon the occurrence of specified events of default, which include, but are not limited to, the occurrence of a material adverse change in the Company’s business, operations, or financial or other condition. Amounts outstanding upon the occurrence of an event of default are payable upon SVB’s demand and shall accrue interest at an additional rate of 5.0% per annum of the past due amount outstanding. As of September 30, 2019, the Company was in compliance with all covenants under the Credit Facility. As such, as of September 30, 2019, the classification of the loan balance as stated on the balance sheet was based on the timing of payment obligations. The Company incurred $215 of debt issuance costs related to external legal and transaction fees. The Company recorded the debt issuance costs as a direct deduction from the carrying value of the Term Loans which are amortized as interest expense using the effective-interest method over the term of the Term Loans. As of September 30, 2019, the Company had drawn a Term Loan of $5,000. As of September 30, 2019, Debt consisted of the following: September 30, 2019 Total debt $ 5,000 Less: Current portion of long-term-debt (167) Total debt, net of current portion 4,833 Debt financing costs, net of accretion (191) Accretion related to final payment 28 Long-term debt, net $ 4,670 As of September 30, 2019, the estimated future principal payments due are as follows: 2019 (excluding the nine months ended September 30, 2019) $ — 2020 666 2021 2,000 2022 2,000 2023 334 Total debt $ 5,000 During the three and nine months ended September 30, 2019, the Company recognized $51 and $64, respectively, of interest expense related to the Credit Facility.

Stockholders' equity

Stockholders' equity	9 Months Ended
	Sep. 30, 2019
Stockholders' equity
Stockholders’ equity	8. Stockholders’ equity Preferred stock As of September 30, 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 September 30, 2019 and December 31, 2018, there were 5,205,407 and 3,856,932 shares of common stock, respectively, reserved for the exercise of outstanding stock options and warrants. September 30, December 31, 2019 2018 Warrants 39,474 110,365 Restricted stock units 447,336 — Stock options 4,718,597 3,746,567 5,205,407 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 September 30, 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 September 30, 2019 , warrants to purchase 39,474 shares of common stock were outstanding. During the quarter ended September 30, 2019, the Company issued 69,680 shares of common stock upon the exercise of warrants.

Stock options

Stock options	9 Months Ended
	Sep. 30, 2019
Stock options
Stock options	9. Stock options Stock option plans In June 2017 the Company’s shareholders approved the 2017 Stock Incentive Plan (the 2017 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 2017 Plan provides that the number of shares of common stock issuable under the 2017 Plan shall 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 2017 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) (the 2007 Plan and the 2017 Plan collectively are referred to as the Plans). 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 September 30, 2019, there were 1,983,432 shares available for future issuance under the 2017 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, which is generally the closing price for a share of the Company’s common stock on the Nasdaq Global Select Market on such date, 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 2017 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. Stock option activity A summary of the activity under the Plans is as follows: Weighted- Number Average of Shares Exercise Price Options outstanding at January 1, 2019 3,746,567 $ 6.58 Granted 1,630,283 3.74 Exercised (58,964) 2.04 Cancelled (599,289) 9.42 Options outstanding at September 30, 2019 4,718,597 $ 5.29 Options exercisable at September 30, 2019 2,531,612 $ 4.36 The weighted-average grant date fair value of options granted during the nine months ended September 30, 2019 and 2018, was $ 2.47 and $ 9.45 per share, respectively. Cash received from the exercise of stock options was $121 and $ 853 for the nine months ended September 30, 2019 and 2018, respectively. Restricted stock units In July 2019, the Company issued 449,331 restricted stock units with service conditions to employees, of which 447,366 are outstanding as of September 30, 2019. Vesting of these awards is contingent on the fulfillment of the service conditions. The weighted-average grant date fair value of restricted stock units was $4.00 per share. The Company recognized $184 of expense related to these awards in the third quarter of 2019 and will continue to recognize stock-based compensation expense related to these awards through July 2021 when the awards vest. Stock-based compensation expense 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. The following table presents stock-based compensation expense by award type included within the Company’s condensed consolidated statement of operations and comprehensive loss: Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Stock options $ 1,055 $ 988 $ 3,240 $ 2,692 Restricted stock units 184 — 184 — Employee stock purchase plan 46 65 186 65 Stock-based compensation expense included in Total operating expenses $ 1,285 $ 1,053 $ 3,610 $ 2,757 The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss: Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Research and development $ 587 $ 495 $ 1,636 $ 1,302 General and administrative 698 558 1,974 1,455 Stock-based compensation expense included in Total operating expenses $ 1,285 $ 1,053 $ 3,610 $ 2,757 The Company had an aggregate of $8,290 of unrecognized stock compensation cost as of September 30, 2019 remaining to be amortized over the weighted-average period of 2.2 years. As of September 30, 2019, the Company had $1,605 of unrecognized stock-based compensation expense related to restricted stock units. The fair value of each 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 Nine months ended September 30, September 30, 2019 2018 2019 2018 Risk-free interest rate 1.9 % 2.9 % 2.4 % 2.7 % Expected dividend yield — % — % — % — % Expected term (years) 6.11 5.85 5.99 6.06 Expected stock price volatility 75 % 73 % 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 September 30, 2019. During the nine months ended September 30, 2019, the Company issued 82,281 shares under the 2017 ESPP. The Company did not issue any shares under the 2017 ESPP during the three and nine months ended September 30, 2018 As of September 30, 2019, there were 332,877 shares available for issuance under the 2017 ESPP.

Leases

Leases	9 Months Ended
	Sep. 30, 2019
Leases
Leases	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. The Company’s exercise of this option was not considered reasonably certain as of September 30, 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 first quarter of 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 Nine months ended September 30, 2019 Operating lease cost $ 540 $ 1,620 Finance lease cost: Amortization of right-of-use assets $ 25 $ 50 Interest on lease liabilities 7 14 $ 32 $ 64 Supplemental balance sheet information related to leases was as follows: Nine months ended September 30, 2019 Operating leases: Operating lease right-of-use assets $ 3,059 Operating lease liabilities, current 2,145 Operating lease liabilities 1,257 Finance leases: Property and equipment, gross $ 429 Property and equipment, accumulated depreciation (50) Other liabilities, current 85 Other liabilities 299 Weighted-average remaining lease term: Operating leases 1.6 years Finance leases 4.0 years Weighted-average discount rate: Operating leases Finance leases Supplemental cash flow information related to leases was as follows: Nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,685 Operating cash flows from finance leases 14 Financing cash flows from finance leases 58 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 September 30, 2019 were as follows: Operating leases Finance leases 2019 (excluding the nine months ended September 30, 2019) $ 586 $ 29 2020 2,394 116 2021 687 116 2022 — 84 2023 and thereafter — 92 3,667 437 Imputed interest — (8) $ 3,667 $ 429

Commitments

Commitments	9 Months Ended
	Sep. 30, 2019
Commitments
Commitments	11 . Commitments License agreements Through September 30, 2019, the Company had licensed intellectual property from two biotechnology companies. The consideration included upfront payments and a commitment to pay annual license fees, milestone payments and, upon product commercialization, royalties on revenue generated from the sale of products covered by the licenses. The Company recorded a milestone payment of $600 during the three and nine months ended September 30, 2019 upon dosing of the first patient in the expansion cohort of the XMT-1536 clinical trial. The Company did not record any milestone payments during the nine months ended September 30, 2018.

Subsequent events

Subsequent events	9 Months Ended
	Sep. 30, 2019
Subsequent events
Subsequent events	12. Subsequent events For the purposes of the unaudited financial statements as of September 30, 2019 and the period then ended, the Company has evaluated subsequent events through November 6, 2019, the date the unaudited interim financial statements were issued. There were no items requiring adjustment or disclosure in the consolidated financial statements.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2019
Summary of Significant Accounting Policies
Principles of Consolidation	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	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	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.
Fair Value Measurements	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. 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	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: Nine months ended Nine months ended September 30, 2019 September 30, 2018 Beginning End Beginning End of period of period of period of period Cash and cash equivalents $ 59,634 $ 58,196 $ 26,591 $ 61,604 Restricted cash included in other assets, noncurrent 371 321 371 371 Total cash, cash equivalents and restricted cash per statement of cash flows $ 60,005 $ 58,517 $ 26,962 $ 61,975
Marketable Securities	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 debt securities are included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Realized gains and losses and declines in value judged to be other than temporary are included as a component of other income (expense), net, based on the specific identification method. When determining whether a decline in value is other than temporary, the Company considers various factors, including whether the Company has the intent to sell the security, and whether it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis. Fair value is determined based on quoted market prices.
Other Assets	Other Assets The Company recorded other assets of $1,453 and $1,503 as of September 30, 2019 and December 31, 2018, respectively, comprised of restricted cash of $321 and $371, respectively, held as security deposits for a standby letter of credit and $1,132 at the end of each period held by a service provider.
Net Loss per Share	Net Loss per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the diluted net loss per share calculation, convertible preferred stock, warrants to purchase common stock and options to purchase common stock are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares): Three and nine months ended September 30, 2019 2018 Warrants 39,474 110,365 Restricted stock units 447,336 — Stock options 4,718,597 3,661,962 5,205,407 3,772,327
Leases	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 has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less. 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 lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately.
Recently Issued Accounting Pronouncements	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. In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. Currently, U.S. GAAP delays recognition of the full amount of credit losses until the loss is probable of occurring. Under this ASU, the income statement will reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses will be based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down of the security. This ASU is effective for annual periods beginning after December 15, 2019, including interim periods within those annual reporting periods, and early adoption is permitted. The Company is currently evaluating the potential impact that ASU 2016-13 may have on its financial position and results of operations.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2019
Summary of Significant Accounting Policies
Schedule of cash, cash equivalents and restricted cash	Nine months ended Nine months ended September 30, 2019 September 30, 2018 Beginning End Beginning End of period of period of period of period Cash and cash equivalents $ 59,634 $ 58,196 $ 26,591 $ 61,604 Restricted cash included in other assets, noncurrent 371 321 371 371 Total cash, cash equivalents and restricted cash per statement of cash flows $ 60,005 $ 58,517 $ 26,962 $ 61,975
Schedule of outstanding potentially dilutive securities excluded from calculation of diluted net loss per share	The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares): Three and nine months ended September 30, 2019 2018 Warrants 39,474 110,365 Restricted stock units 447,336 — Stock options 4,718,597 3,661,962 5,205,407 3,772,327

Collaboration Agreements (Table

Collaboration Agreements (Tables)	9 Months Ended
	Sep. 30, 2019
Collaboration agreements
Schedule of changes in the balances of our contract assets and liabilities and recognized revenue	The following table presents changes in the balances of our contract assets and liabilities during the nine months ended September 30, 2019 and 2018: Balance at Beginning Balance at of Period Additions Deductions End of Period Nine months ended September 30, 2019 Contract assets $ — $ — $ — $ — Contract liabilities: Deferred revenue $ 46,196 $ — $ 41,550 $ 4,646 Balance at Beginning Balance at of Period Additions Deductions End of Period Nine months ended September 30, 2018 Contract assets $ — $ — $ — $ — Contract liabilities: Deferred revenue $ 52,439 $ 2,373 $ 7,906 $ 46,906 During the three months ended September 30, 2019 and 2018 and the nine months ended September 30, 2019 and 2018, 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 Nine months ended September 30, September 30, 2019 2018 2019 2018 Revenue recognized in the period from: Amounts included in the contract liability at the beginning of the period $ 834 $ 1,760 $ 41,550 $ 7,515 Performance obligations satisfied in previous periods $ — $ — $ — $ —

Fair value measurements (Tables

Fair value measurements (Tables)	9 Months Ended
	Sep. 30, 2019
Fair value measurements
Schedule of assets and liabilities measured and carried at fair value	Significant Quoted Prices Other Significant in Active Observable Unobservable Fair Markets Inputs Inputs Value (Level 1) (Level 2) (Level 3) September 30, 2019 Marketable securities: Commercial paper $ 14,871 $ — $ 14,871 $ — Corporate bonds 12,010 — 12,010 — U.S. Treasuries 26,925 — 26,925 — $ 53,806 $ — $ 53,806 $ — 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 $ — $ —

Marketable securities (Tables)

Marketable securities (Tables)	9 Months Ended
	Sep. 30, 2019
Marketable securities
Schedule of reconciliation of marketable securities from cost basis to fair value	Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2019 Commercial paper $ 14,871 $ — $ — $ 14,871 Corporate bonds 11,984 26 — 12,010 U.S. Treasuries 26,923 2 — 26,925 $ 53,778 $ 28 $ — $ 53,806 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

Accrued expenses (Tables)

Accrued expenses (Tables)	9 Months Ended
	Sep. 30, 2019
Accrued expenses
Schedule of accrued expenses	September 30, December 31, 2019 2018 Accrued payroll and related expenses $ 3,080 $ 3,042 Accrued preclinical, manufacturing and clinical expenses 4,017 8,314 Accrued professional fees 710 567 Accrued other 230 452 $ 8,037 $ 12,375

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2019
Debt
Schedule of debt	September 30, 2019 Total debt $ 5,000 Less: Current portion of long-term-debt (167) Total debt, net of current portion 4,833 Debt financing costs, net of accretion (191) Accretion related to final payment 28 Long-term debt, net $ 4,670
Schedule of estimated future payments	2019 (excluding the nine months ended September 30, 2019) $ — 2020 666 2021 2,000 2022 2,000 2023 334 Total debt $ 5,000

Stockholders' equity (Tables)

Stockholders' equity (Tables)	9 Months Ended
	Sep. 30, 2019
Stockholders' equity
Schedule for number of common stock reserved for exercise of outstanding stock options and warrants	September 30, December 31, 2019 2018 Warrants 39,474 110,365 Restricted stock units 447,336 — Stock options 4,718,597 3,746,567 5,205,407 3,856,932

Stock options (Tables)

Stock options (Tables)	9 Months Ended
	Sep. 30, 2019
Stock options
Schedule of stock option activity under Plan	Weighted- Number Average of Shares Exercise Price Options outstanding at January 1, 2019 3,746,567 $ 6.58 Granted 1,630,283 3.74 Exercised (58,964) 2.04 Cancelled (599,289) 9.42 Options outstanding at September 30, 2019 4,718,597 $ 5.29 Options exercisable at September 30, 2019 2,531,612 $ 4.36
Schedule of stock-based compensation expense by award type	Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Stock options $ 1,055 $ 988 $ 3,240 $ 2,692 Restricted stock units 184 — 184 — Employee stock purchase plan 46 65 186 65 Stock-based compensation expense included in Total operating expenses $ 1,285 $ 1,053 $ 3,610 $ 2,757
Schedule of stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss	Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Research and development $ 587 $ 495 $ 1,636 $ 1,302 General and administrative 698 558 1,974 1,455 Stock-based compensation expense included in Total operating expenses $ 1,285 $ 1,053 $ 3,610 $ 2,757
Schedule of weighted average assumptions for estimating fair value of option awards	Three months ended Nine months ended September 30, September 30, 2019 2018 2019 2018 Risk-free interest rate 1.9 % 2.9 % 2.4 % 2.7 % Expected dividend yield — % — % — % — % Expected term (years) 6.11 5.85 5.99 6.06 Expected stock price volatility 75 % 73 % 74 % 73 %

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2019
Leases
Schedule of components of lease expense	Three months ended Nine months ended September 30, 2019 Operating lease cost $ 540 $ 1,620 Finance lease cost: Amortization of right-of-use assets $ 25 $ 50 Interest on lease liabilities 7 14 $ 32 $ 64
Schedule of supplemental balance sheet information related to leases	Nine months ended September 30, 2019 Operating leases: Operating lease right-of-use assets $ 3,059 Operating lease liabilities, current 2,145 Operating lease liabilities 1,257 Finance leases: Property and equipment, gross $ 429 Property and equipment, accumulated depreciation (50) Other liabilities, current 85 Other liabilities 299 Weighted-average remaining lease term: Operating leases 1.6 years Finance leases 4.0 years Weighted-average discount rate: Operating leases Finance leases
Schedule of supplemental cash flow information related to leases	Nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,685 Operating cash flows from finance leases 14 Financing cash flows from finance leases 58 Right-of-use assets obtained in exchange for lease obligations: Operating leases 4,369 Finance leases 429
Schedule of future minimum lease payments under non-cancellable leases	Operating leases Finance leases 2019 (excluding the nine months ended September 30, 2019) $ 586 $ 29 2020 2,394 116 2021 687 116 2022 — 84 2023 and thereafter — 92 3,667 437 Imputed interest — (8) $ 3,667 $ 429

Nature of business and basis _2

Nature of business and basis of presentation - Termination of collaborative arrangement - (Details) - USD ($) $ in Thousands	3 Months Ended							6 Months Ended	9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Collaboration agreements
Net (loss) income	$ (16,792)	$ (17,071)	$ 21,901	$ (22,431)	$ (17,069)	$ (12,354)	$ (12,403)		$ (11,962)	$ (41,825)
Deferred revenue recognized	$ 834				$ 1,760				$ 41,550	$ 7,515
2016 Restated Tokeda Agreement and XMT-1522 Agreement
Collaboration agreements
Deferred revenue recognized			$ 39,965					$ 0

Nature of business and basis _3

Nature of business and basis of presentation - Liquidity (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Nature of business and basis of presentation
Net cash (used in) provided by operating activities	$ (55,168)	$ (39,312)
Accumulated deficit	$ (176,128)		$ (164,166)
Substantial doubt about going concern, within twelve months	false

Summary of significant accoun_4

Summary of significant accounting policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$ 58,196	$ 59,634	$ 61,604	$ 26,591
Restricted cash included in other assets	321	371	371	371
Total cash, cash equivalents and restricted cash per statement of cash flows	$ 58,517	$ 60,005	$ 61,975	$ 26,962
Restricted cash, Balance Sheet Location	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent

Summary of significant accoun_5

Summary of significant accounting policies - Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Other Assets
Other assets	$ 1,453	$ 1,503
Restricted cash included in other assets	$ 321	$ 371	$ 371	$ 371
Restricted cash, Balance Sheet Location	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent	us-gaap:OtherAssetsNoncurrent
Held by service provider	$ 1,132	$ 1,132

Summary of significant accoun_6

Summary of significant accounting policies - Antidilutive securities (Details) - shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Anti-dilutive securities
Anti-dilutive securities	5,205,407	3,772,327
Warrants
Anti-dilutive securities
Anti-dilutive securities	39,474	110,365
Restricted stock units
Anti-dilutive securities
Anti-dilutive securities	447,336
Stock options.
Anti-dilutive securities
Anti-dilutive securities	4,718,597	3,661,962

Summary of significant accoun_7

Summary of significant accounting policies - Recently Issued Accounting Pronouncement (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Sep. 30, 2019
New Accounting pronouncements
Lease, Practical Expedients, Package	true
Lease liability		$ 3,667
Operating lease right-of-use assets		$ 3,059
ASU-02, Leases (ASC 842)
New Accounting pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected	Modified Retrospective
ASU-02, Leases (ASC 842) | Adjustment
New Accounting pronouncements
Lease liability	$ 4,778
Operating lease right-of-use assets	4,369
Deferred rent	$ 409

Collaboration agreements - Merc

Collaboration agreements - Merck KGaA (Details) - Merck KGaA $ in Thousands	1 Months Ended
	Jun. 30, 2014USD ($)item	Sep. 30, 2019USD ($)item	Dec. 31, 2017item
Collaboration agreements
Upfront payment received	$ 12,000
Number of targets | item	6
Amount of additional fees receivable when target is designated and commercial license to target is granted	$ 0
Number of targets designated | item		6	6
Next potential development milestone payment eligible to receive		$ 500

Collaboration agreements - Me_2

Collaboration agreements - Merck KGaA - Accounting Analysis (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)	Dec. 31, 2018USD ($)	Dec. 31, 2017USD ($)item
Collaboration agreements
Collaboration revenue	$ 844	$ 2,151	$ 42,081	$ 9,405
Research and development	13,701	15,180	42,610	40,098
Accounts receivable	298		298		$ 459
Deferred revenue	4,646	46,906	4,646	46,906	46,196	$ 52,439
Merck KGaA Agreement and Merck KGaA Supply Agreement
Collaboration agreements
Deferred revenue	$ 4,646		$ 4,646
Merck KGaA
Collaboration agreements
Number of targets designated | item	6		6			6
Estimated transaction price	$ 21,500		$ 21,500		22,070
Decrease in fees expected to be received for research and development activities	570		570
Amount of research and development fees expected to be received	6,500		6,500
Collaboration revenue	800	$ 1,482	836	$ 2,426
Merck KGaA Supply Agreement
Collaboration agreements
Collaboration revenue	34		1,255
Research and development	34		1,255
Accounts receivable	$ 262		$ 262		$ 450
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-01-01 | Merck KGaA | Rights to future technological improvements
Collaboration agreements
Expected recognition period	10 years		10 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-01-01 | Merck KGaA | Joint research committee services
Collaboration agreements
Expected recognition period	5 years		5 years

Collaboration agreements - XMT-

Collaboration agreements - XMT-1522 Strategic Partnership (Details) - USD ($) $ in Thousands	Jan. 02, 2019	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Collaboration agreements
Research and development		$ 13,701		$ 15,180	$ 42,610	$ 40,098
XMT-1522 Agreement
Collaboration agreements
Period of time until agreement terminated	30 days
Period of shared development costs following effective termination date	30 days
Research and development			$ 200

Collaboration agreements - Take

Collaboration agreements - Takeda strategic R & D partnership (Details) - 2016 Restated Tokeda Agreement $ in Thousands	Jan. 02, 2019	Mar. 31, 2019USD ($)	Jan. 31, 2016item
Collaboration agreements
Number of targets | item			7
Period of time until agreement terminated	45 days
Amount of costs billed | $		$ 195

Collaboration agreements - 2016

Collaboration agreements - 2016 Takeda and XMT-1522 Agreements - Accounting Analysis (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Collaboration agreements
Deferred revenue recognized	$ 834		$ 1,760		$ 41,550	$ 7,515
Collaboration revenue	844		$ 2,151		42,081	$ 9,405
Accounts receivable	298			$ 298	298		$ 459
Accounts payable	7,304			7,304	7,304		10,727
2016 Restated Tokeda Agreement and XMT-1522 Agreement
Collaboration agreements
Deferred revenue recognized		$ 39,965		0
Accounts receivable	26			26	26		9
Accounts payable	$ 2,754			$ 2,754	$ 2,754		$ 2,749

Collaboration Agreements - Cont

Collaboration Agreements - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Contract liabilities
Deferred revenue, Balance at Beginning of Period			$ 46,196	$ 52,439
Deferred revenue, Additions				2,373
Deferred revenue, Deductions			41,550	7,906
Deferred revenue, Balance at End of Period	$ 4,646	$ 46,906	4,646	46,906
Revenue recognized in the period from:
Amounts included in the contract liability at the beginning of the period	$ 834	$ 1,760	$ 41,550	$ 7,515

Collaboration Agreements - Othe

Collaboration Agreements - Other Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Collaboration agreements
Collaboration revenue	$ 844	$ 2,151	$ 42,081	$ 9,405
Type of Revenue	mrsn:CollaborationMember	mrsn:CollaborationMember	mrsn:CollaborationMember	mrsn:CollaborationMember
Accounts receivable	$ 298		$ 298		$ 459
Asana BioSciences
Collaboration agreements
Next potential milestone payment eligible to receive	2,500		2,500
Asana BioSciences | Limited services
Collaboration agreements
Collaboration revenue	10	$ 587	25	$ 782
Asana BioSciences | Milestone
Collaboration agreements
Collaboration revenue	$ 0		$ 0	$ 1,500

Fair value measurements (Detail

Fair value measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Fair value measurements
Marketable securities	$ 53,806	$ 10,497
Transfers between fair value measurement level 1 to level 2	0		$ 0
Transfers between fair value measurement level 2 to level 1	0		$ 0
Recurring basis
Fair value measurements
Total assets regularly measured and carried at fair value	53,806	10,497
Recurring basis | Commercial paper
Fair value measurements
Marketable securities	14,871
Recurring basis | Corporate bonds
Fair value measurements
Marketable securities	12,010
Recurring basis | U.S. Treasuries
Fair value measurements
Marketable securities	26,925	10,497
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value measurements
Total assets regularly measured and carried at fair value		10,497
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasuries
Fair value measurements
Marketable securities		$ 10,497
Recurring basis | Significant Other Observable Inputs (Level 2)
Fair value measurements
Total assets regularly measured and carried at fair value	53,806
Recurring basis | Significant Other Observable Inputs (Level 2) | Commercial paper
Fair value measurements
Marketable securities	14,871
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate bonds
Fair value measurements
Marketable securities	12,010
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. Treasuries
Fair value measurements
Marketable securities	$ 26,925

Marketable securities (Details)

Marketable securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Marketable securities
Amortized Cost	$ 53,778	$ 10,505
Gross Unrealized Gains	28
Gross Unrealized Losses		(8)
Marketable securities	53,806	10,497
Commercial paper
Marketable securities
Amortized Cost	14,871
Marketable securities	14,871
Corporate bonds
Marketable securities
Amortized Cost	11,984
Gross Unrealized Gains	26
Marketable securities	12,010
U.S. Treasuries
Marketable securities
Amortized Cost	26,923	10,505
Gross Unrealized Gains	2
Gross Unrealized Losses		(8)
Marketable securities	$ 26,925	$ 10,497

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accrued expenses
Accrued payroll and related expenses	$ 3,080	$ 3,042
Accrued preclinical, manufacturing and clinical expenses	4,017	8,314
Accrued professional fees	710	567
Accrued other	230	452
Total	$ 8,037	$ 12,375

Debt - Agreement (Details)

Debt - Agreement (Details) - Credit Facility $ in Thousands	May 08, 2019USD ($)installment	Sep. 30, 2019USD ($)
Debt
Maximum borrowing capacity	$ 20,000
Number of principal advances | installment	4
Drawn amount	$ 5,000	$ 5,000
Number of monthly payments of principal to be paid following period of monthly interest only payments | installment	30
Final payment as percentage of original principal amount	5.00%
Commitment fee (as a percent)	3.00%
Liquidity ratio	1.50
Additional rate in event of default	5.00%
Debt issuance costs	$ 215
Prepayment occurs prior to May 8, 2020
Debt
Prepayment fee (as a percent)	3.00%
Prepayment occurs between May 8, 2020 and May 8, 2021
Debt
Prepayment fee (as a percent)	2.00%
Prepayment occurs after May 8, 2021 but before maturity date and first anniversary of funding date
Debt
Prepayment fee (as a percent)	1.00%
Minimum
Debt
Term loan tranche amount	$ 5,000
Interest rate (as a percent)	4.00%
Prime rate
Debt
Spread (as a percent)	(1.50%)

Debt - Components (Details)

Debt - Components (Details) $ in Thousands	Sep. 30, 2019USD ($)
Debt
Total debt	$ 5,000
Less: Current portion of long-term-debt	(167)
Total debt, net of current portion	4,833
Debt financing costs, net of accretion	(191)
Accretion related to final payment	28
Long-term debt, net	$ 4,670

Debt - Future payments (Details

Debt - Future payments (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019USD ($)	Sep. 30, 2019USD ($)
Estimated future principal payments
2020	$ 666	$ 666
2021	2,000	2,000
2022	2,000	2,000
2023	334	334
Total debt	5,000	5,000
Credit Facility
Estimated future principal payments
Interest expense	$ 51	$ 64

Stockholders' Equity - Preferre

Stockholders' Equity - Preferred stock (Details) - shares	Sep. 30, 2019	Dec. 31, 2018
Stockholders' equity
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0

Stockholders' Equity - Common s

Stockholders' Equity - Common stock (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	9 Months Ended
	Mar. 31, 2019USD ($)$ / sharesshares	Mar. 31, 2019$ / sharesshares	Sep. 30, 2019USD ($)Voteshares	Dec. 31, 2018shares
Common stock
Net proceeds from public offering of common stock | $	$ 92,162		$ 92,162
Common stock
Common stock
Number of votes for each shares held | Vote			1
Issuance of common stock under public offering, net of issuance costs (in shares)	24,437,500	24,437,500
Share price (in dollars per share) | $ / shares	$ 4	$ 4
Warrants and share-based payment awards
Common stock
Number of shares reserved for future issuance			5,205,407	3,856,932
Warrants
Common stock
Number of shares reserved for future issuance			39,474	110,365
Share-based payments | Restricted stock units
Common stock
Number of shares reserved for future issuance			447,336
Share-based payments | Stock options.
Common stock
Number of shares reserved for future issuance			4,718,597	3,746,567

Stockholders' Equity - At-the-m

Stockholders' Equity - At-the-market equity offering program (Details) - ATM - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Jul. 02, 2018
Offering program
Amount of shares authorized to be offered and sold		$ 75,000
Number of shares sold	0

Stockholders' Equity - Warrants

Stockholders' Equity - Warrants (Details) - $ / shares	3 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2013
Warrants
Number of shares into which warrant issued during period may be converted		129,491
Warrant exercise price per share (in dollars per share)		$ 0.05
Contractual life of warrants		10 years
Number of shares of common stock into which warrants may be converted	39,474
Common stock issued upon exercise of warrant (in shares)	69,680

Stock options - Plans (Details)

Stock options - Plans (Details) - shares	1 Months Ended		9 Months Ended
	Jan. 31, 2019	Jun. 30, 2017	Sep. 30, 2019	Dec. 31, 2018
Stock options
Number of shares outstanding			4,718,597	3,746,567
2007 Plan
Stock options
Number of shares outstanding		3,141,625
2017 Plan
Stock options
Number of shares authorized		2,255,000
Cumulative increase in number of shares issuable (as a percent)		4.00%
Additional shares authorized	929,378
Number of shares available for future issuance			1,983,432
Vesting period (in years)			4 years
2017 Plan | Maximum
Stock options
Expiration period			10 years

Stock options - Activity under

Stock options - Activity under stock option plan (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Number of Shares
Outstanding at beginning of period (in shares)	3,746,567
Granted (in shares)	1,630,283
Exercised (in shares)	(58,964)
Cancelled (in shares)	(599,289)
Outstanding at end of period (in shares)	4,718,597
Options exercisable, at end of period (in shares)	2,531,612
Weighted- Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 6.58
Granted (in dollars per share)	3.74
Exercised (in dollars per share)	2.04
Cancelled (in dollars per share)	9.42
Outstanding at end of period (in dollars per share)	5.29
Options exercisable, at end of period (in dollars per share)	4.36
Additional Disclosures
Weighted-average grant date fair value of options granted (in dollars per share)	$ 2.47	$ 9.45
Cash received from the exercise of stock options (in dollars)	$ 121	$ 853

Stock options - Restricted stoc

Stock options - Restricted stock units (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Restricted stock units
Share-based compensation expense		$ 1,285	$ 1,053	$ 3,610	$ 2,757
Restricted stock units
Restricted stock units
Awards issued (in shares)	449,331
Awards outstanding (in shares)		447,366		447,366
Weighted-average grant date fair value (in dollars per share)	$ 4
Share-based compensation expense		$ 184		$ 184

Stock options - Stock based com

Stock options - Stock based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stock options
Stock-based compensation expense included in total operating expenses	$ 1,285	$ 1,053	$ 3,610	$ 2,757
Unrecognized stock compensation cost	8,290		$ 8,290
Weighted-average amortization period of unrecognized stock compensation cost			2 years 2 months 12 days
Stock options.
Stock options
Stock-based compensation expense included in total operating expenses	1,055	988	$ 3,240	2,692
Restricted stock units
Stock options
Stock-based compensation expense included in total operating expenses	184		184
Unrecognized stock compensation cost	1,605		1,605
Employee stock purchase plan
Stock options
Stock-based compensation expense included in total operating expenses	46	65	186	65
Research and development
Stock options
Stock-based compensation expense included in total operating expenses	587	495	1,636	1,302
General and administrative
Stock options
Stock-based compensation expense included in total operating expenses	$ 698	$ 558	$ 1,974	$ 1,455

Stock options - Fair value assu

Stock options - Fair value assumptions (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Weighted average fair value assumptions
Risk-free interest rate (as a percent)	1.90%	2.90%	2.40%	2.70%
Expected term (years)	6 years 1 month 10 days	5 years 10 months 6 days	5 years 11 months 27 days	6 years 22 days
Expected stock price volatility (as a percent)	75.00%	73.00%	74.00%	73.00%

Stock options - Employee Stock

Stock options - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan - shares	1 Months Ended	3 Months Ended	9 Months Ended
	Jan. 31, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2017
Employee Stock Purchase Plan
Number of shares reserved for future issuance					225,000
Additional shares authorized	232,344
Number of shares issued		0	82,281	0
Number of shares available for future issuance			332,877

Leases - Description (Details)

Leases - Description (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019
Office space, Cambridge, MA
Leases
Renewal term	5 years
Equipment, Leased | Minimum
Leases
Remaining lease terms	3 years
Equipment, Leased | Maximum
Leases
Remaining lease terms	5 years
Property and equipment, Finance lease
Finance leases
Property and equipment, gross	$ 429	$ 429

Leases - Components of Lease Ex

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Components of lease expense
Operating lease cost	$ 540	$ 1,620
Amortization of right-of-use assets	25	50
Interest on lease liabilities	7	14
Finance lease cost	$ 32	$ 64

Leases - Supplemental balance s

Leases - Supplemental balance sheet information (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Mar. 31, 2019
Operating leases:
Operating lease right-of-use assets	$ 3,059
Operating lease liabilities	2,145
Operating lease liabilities	1,257
Finance leases
Finance lease liability, current	$ 85
Finance Lease, Liability, Current, Statement of Financial Position	us-gaap:OtherLiabilitiesCurrent
Finance Lease, Liability, Noncurrent	$ 299
Finance Lease, Liability, Noncurrent, Statement of Financial Position	us-gaap:OtherLiabilitiesNoncurrent
Weighted-average remaining lease term: Operating leases	1 year 7 months 6 days
Weighted-average remaining lease term: Finance leases	4 years
Weighted-average discount rate: Operating leases (as a percent)	10.30%
Weighted-average discount rate: finance leases (as a percent)	6.90%
Property and equipment, Finance lease
Finance leases
Property and equipment, gross	$ 429	$ 429
Property and equipment, accumulated depreciation	$ (50)

Leases - Supplemental cash flow

Leases - Supplemental cash flow information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)
Leases
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases	$ 1,685
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases	14
Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases	58
Right-of-use assets obtained in exchange for lease obligations: Operating leases	4,369
Right-of-use assets obtained in exchange for lease obligations: Finance leases	$ 429

Leases - Future minimum lease p

Leases - Future minimum lease payments (Details) $ in Thousands	Sep. 30, 2019USD ($)
Operating leases
2019 (remainder of year)	$ 586
2020	2,394
2021	687
Total minimum lease payments	3,667
Total operating lease liability	3,667
Finance leases
2019 (excluding the six months ended June 30, 2019)	29
2020	116
2021	116
2022	84
2023 and thereafter	92
Total minimum lease payments	437
Imputed interest	(8)
Total finance lease liability	$ 429

Commitments - License agreement

Commitments - License agreements (Details) - License agreements $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019USD ($)	Sep. 30, 2019USD ($)item	Sep. 30, 2018USD ($)
Commitments
Number of biotechnology companies where Company has licensed intellectual property | item		2
Milestone payments | $	$ 600	$ 600	$ 0