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Good morning. My name is Colby and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2022 Seres Therapeutics, Inc. Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Dr. Carlo Tanzi, Head of Investor Relations.

Thank you and good morning. Our press release for the company's third quarter 2022 financial results and business update became available at 7:00 A.M. Eastern time this morning and can be found on the Investors and News section of the company's website. I'd like to remind you that we'll be making forward-looking statements, including the potential approval and launch of investigational SER-109 in its status first-in-class oral therapeutic. The anticipated indication for SER-109, the potential for microbiome therapeutics to protect against infection, the use of cash to fund operations and other statements which are not historical fact. Actual results may differ materially. Additionally, these statements are subject to certain risks and uncertainties which are discussed under the Risk Factors section of our recent SEC filings. Any forward-looking statements made on today's call represent our views as of today only. We may update these statements in the future but we disclaim any obligation to do so. On today's call with prepared remarks, I'm joined by Eric Shaff, Seres' President and CEO; David Arkowitz, CFO; Dr. Lisa von Molke, Chief Medical Officer; Dr. Matthew Henn, Chief Scientific Officer; and additional members of our management team will also be available during the Q&A. With that, I’ll pass the call to Eric.

Thank you, Carlo and good morning, everyone. Seres continues to make excellent progress advancing our microbiome therapeutics approach. As an organization, our top priorities are to secure the regulatory approval of SER-109, our lead microbiome therapeutic candidate for recurrent C. difficile infection and drive commercial success. We were very pleased to recently announce that our SER-109 BLA has been accepted for priority review by the FDA and the agency has provided a PDUFA target action date of April 26, 2023. Our SER-109 BLA filing is supported by a Phase III development program that showed high levels of durable efficacy coupled with a favorable safety profile. This attractive clinical profile is complemented by a patient-friendly oral route of administration that avoids other burdensome and costly procedures. We believe SER-109 represents a winning product profile and, if approved by the FDA, this could represent an important new medicine for those suffering from recurrent CDI. These are patients facing a life-threatening condition that have limited options today. We believe that SER-109 may have the opportunity to transform how recurrent CDI is managed, resulting in far better patient outcomes as well as a reduced burden to hospital systems. The approval of SER-109 would also provide clear validation, definitively showing that microbiome therapeutics have matured as a new medical modality. We believe that beyond SER-109, Seres has the potential to develop and launch multiple additional microbiome medicines for serious diseases. We are planning for the commercial launch of SER-109 soon after a potential FDA approval and our team is eagerly preparing for this milestone event. The recurrent CDI market opportunity is substantial, with nearly 170,000 cases per year. And we believe that our clinical data supports SER-109's clinical benefit across this broad patient group, including those experiencing a first recurrence. Alongside our collaborator, immune therapeutics and Nestle Health Science Company, our team continues to make excellent progress advancing educational efforts with physicians and payers in support of broad patient access. We plan to provide additional detailed information about the recurrent CDI market opportunity and our launch preparations at an upcoming webcast investor event that we will be hosting on December 8. As we move towards a potential product approval and launch, we also recognize the importance of strong manufacturing capabilities and this has been a point of emphasis for Seres since the company's founding over a decade ago. We now have commercial drug produced in anticipation of FDA approval. In addition to Seres' internal manufacturing capabilities, we are working closely with external manufacturing partners to ensure patient needs are met following launch while also increasing longer-term product supply. Our objective is to prepare for anticipated future market demand covering potential uptake scenarios. While SER-109 is our priority, we also continue to execute on additional opportunities where we believe our microbiome therapeutic approach could have substantial promise. This includes our SER-155 Phase Ib program, a microbiome therapeutic designed to reduce the incidence of gastrointestinal infections, bloodstream infections and GvHD in patients receiving allo-HSCT. We are also working on additional preclinical candidates that may provide therapeutic solutions for other at-risk patient groups. Supported by well over a decade of research, Seres has established a differentiated platform of technologies and we are well positioned to continue discovering and developing novel microbiome medicines. We are applying our approach to treat high unmet medical needs in addition to diseases, both for infection and more broadly in settings where our research efforts support a role of the gastrointestinal microbiome in disease. With that, I'll now pass the call over to Lisa to discuss some of our recently presented clinical data.

Thanks, Eric. Last month, we were very pleased to have additional Phase III ECOS-4-3 study results published in the Journal of the American Medical Association in the October 19 issue. This publication followed the initial manuscript of the SER-109 Phase III results in the New England Journal of Medicine earlier this year. The publication of the SER-109 Phase III data in these two highly respected journals is remarkable and it speaks to the significance of the results. We also recently presented new SER-109 data at the recent IDWeek and American College of Gastroenterology 2022 annual meeting. The presentations highlighted additional results from the SER-109 ECOS-4-4 study. We showed that the prevention of recurrent CDI was apparent as early as two weeks post treatment. In addition, the clinical benefit was shown to be durable with sustained clinical responses seen through 24 weeks. At the meeting, our medical affairs colleagues were able to interact with numerous infectious disease doctors and gastroenterologists that are actively treating recurrent CDI. As Eric mentioned, we are very pleased that the FDA has accepted our SER-109 BLA filing for review and provided us with a PDUFA target action date of April 26. I'll remind you that we had previously obtained breakthrough therapy designation for SER-109 and the PDUFA date we obtained reflects an expedited priority review of the BLA submission. We continue to closely engage with the FDA as they review the submission. The FDA indicated that they are not currently planning to hold an advisory committee meeting to discuss the application. We are confident in the SER-109 clinical data, the quality of the BLA submission and we are eagerly preparing for an anticipated product approval decision in April of next year. I will now pass the call to Matt to discuss SER-155 and additional R&D efforts.

Thank you, Lisa. Beyond SER-109, our next most advanced program is investigational microbiome therapeutic SER-155 which we are developing to address infections, including antimicrobial resistant infections and graft versus host disease in individuals receiving allogeneic stem cell transplant. SER-155, along with SER-109, as part of our infection protection pipeline franchise, managing infections including the expanding challenge of antimicrobial-resistant infections - is an area of particular interest to Seres, in an area where we believe that microbiome therapeutics may provide a novel approach with widespread medical utility. The allogeneic stem cell transplant patients targeted by SER-155 are at very high risk for serious infections, including by vancomycin and carbapenem-resistant bacterial pathogens as well as graft versus host disease. And we believe that this microbiome therapeutic candidate has the potential to address both issues. The Phase Ib study is being conducted in individuals undergoing treatment for hematologic malignancies such as leukemia. The study is designed to evaluate safety and drug pharmacology, including the engraftment of SER-155 bacteria in patients gastrointestinal tracts. In addition, data are being collected on the reduction in abundance of bacterial pathogens in the gastrointestinal tract to evaluate clinical outcomes, including rates of bloodstream infections and acute graft versus host disease. We anticipate conducting the next preplanned meeting with the study's data and safety monitoring board to review SER-155 Cohort 1 data by the end of the year. In addition, we plan to announce initial safety and pharmacological data from Cohort 1, including drug bacterial species engraftment, in early 2023. Demonstrating favorable safety and highly immunocompromised patients, such as those in the SER-155 Phase Ib study, would be an important milestone for the expansion of microbiome therapeutics as a novel approach to manage bacterial and antimicrobial resistant infections. Looking ahead to pipeline expansion, we believe that our clinical and preclinical data provides strong evidence supporting the potential for microbiome therapeutics to prevent infection in patients at high risk of blood stream infections. Significant opportunities exist in multiple medically compromised patient groups, such as those with cancer neutropenia, cirrhosis and solid organ transplant patients. Seres' MBTX platform is an integrated reverse translational microbiome therapeutics platform that has enabled the discovery and development of novel therapeutic candidates. Our approach leverages clinical in-human data sets combined with data from a broad range of preclinical assays and models customized for the discovery and development of microbiome therapeutics. We are making significant progress advancing additional preclinical programs targeting infection and combating the slow pandemic of antimicrobial resistant infections. We anticipate providing more information about our next clinical candidates in the coming year. In addition, we continue to leverage our reverse translational platforms and unique clinical data sets to advance our understanding of the potential of microbiome therapeutics in inflammatory and immune-mediated disease settings. With that, I’ll now turn the call to David to provide an overview of our financials.

Thanks, Matt. The details of our third quarter financials are included in the press release issued earlier this morning, so I won't reiterate all the figures here. Seres ended the third quarter of 2022 with approximately $233 million in cash, cash equivalents and marketable securities. In July, we completed a registered direct equity offering, resulting in gross proceeds of $100 million. This capital meaningfully strengthens our balance sheet and enables the company to more effectively deliver on our position to bring microbiome therapeutics to patients in need. Regarding our efforts and resources over the near term, we continue to be focused on a number of critical SER-109 related activities which include continuing to ramp up manufacturing operations for commercial supply, both internally and with our partner Recipharm, as well as increasing longer-term SER-109 product supply through our Bacthera collaboration; and in conjunction with Aimmune, continuing and accelerating launch readiness activities. We also continue to invest to advance and expand our pipeline with a focus on infection protection opportunities and further build upon and enhance our platforms and capabilities. As a result of these high priority and value-generating activities, we expect our expenses to increase in the coming quarters but at a moderating rate of growth as we have already expanded our capabilities across much of the organization. In summary, the company continues to be well resourced to prepare for SER-109 commercialization and to drive our ongoing development and preclinical programs while also deploying resources to continue to advance our research platforms where we believe we have differentiated proprietary and sustainable advantages. I'll now turn the call back to Eric.

Thank you, David. We now have a clear view to bring SER-109 to patients as a differentiated microbiome therapeutic for recurrent CDI, if approved by the FDA. Our team, along with Aimmune, is taking the necessary steps to succeed with a strong commercial launch, thereby transforming Seres into a commercial stage organization. We look forward to providing more information in a few weeks, on December 8, about why we see so much opportunity with SER-109 and I hope that you were able to tune into that event. In addition to our lead program, we are also advancing a pipeline of highly promising microbiome therapeutic candidates. We intend to continue to efficiently move these programs forward to key data inflection points. In the coming year, we look forward to providing you with more information about these programs. I'd like to close by thanking the talented and dedicated Seres team for their hard work. It is this team that is responsible for our progress, advancing new therapeutic candidates to patients in need while also pushing forward groundbreaking science in support of future medicines. Operator, with that, let's open the call up to questions.

[Operator Instructions] Your first question comes from the line of Chris Howerton from Jefferies.

Good morning. This is [indiscernible] for Chris. A couple of questions from us. What is the progress for commercialization and launch preparations? Has the FDA scheduled a site visit and brought up any CMC issues? And in terms of your commercial production, do you have the infrastructure to readily produce the first batch upon launch? And how will the Bacthera partnership play into the supply? Thank you very much.

Sure. So, thanks for the questions. Let me start by asking Terry to comment on our commercial preparations and then Dave and I can talk about the next two questions.

Sure. Thanks, Eric. Let me start by saying we're so excited to finally have a PDUFA date and know that we can bring SER-109 to patients in months, not years. So with that in mind, we're continuing our disease education efforts with a focus on the importance of microbiome restoration as the root cause of recurrences and speed of infection. And we significantly ramped our media spend in May alongside the DDW convention which is the largest GI convention. And we've kept that spend elevated, in fact, through the most recent conferences that Lisa referenced, both ID Week and the American College of Gastroenterology just last month. We're also engaging broadly beyond the HCP audience to reach payers - and I've previously mentioned but I'll remind everyone that this spring, we deployed the Nestle payer field team to educate these key stakeholders on, again, the need for microbiome restoration and the foundational role that SER-109 can play. And I'll just say this deployment is a great example of the benefits our co-commercialization arrangement with Nestle brings. They had an existing team for their in-line products. And because of that, we were able to leverage a fully operational group with all of the right preexisting relationships to open doors and have robust conversations relatively early in our prelaunch phase. So finally, as we engage this audience more broadly, we continue to hear recognition of the unmet need in the space and positive reception of the SER-109 profile. And perhaps this is no surprise given the strength of our pivotal data and the highly innovative approach we're bringing. So I’ll turn it back over to you and Dave, Eric, to comment on CMC.

Yes. Thanks, Terry. I mean, just to close out the first question, having spent time with both ID physicians and GIs at IDWeek and ACG. I think it's just important to note that there was a palpable excitement around the idea of patients having additional options. And in particular, the profile that we have with SER-109 that we thought was important to note. On the second question: in terms of specifics for FDA visits, I would say, historically, we haven't gotten into the blow by blow of those details. I will say that we were very pleased to hear from the FDA that they were not currently planning an AdCom which allows us -- we have been preparing for site inspections and visits for some time. There are additional resources that we will be thrilled to continue to reallocate to different activities, including our precommercial opportunities and to continue to double down on that too. In terms of the commercial production, maybe I can ask Dave to just comment quickly on where we stand.

Sure, absolutely. Thanks for the question. So we have been manufacturing commercial supply, both internally and with our external partner Recipharm, as Eric mentioned earlier. That's ongoing and we are on track to be able to support the launch and subsequent supply further past next year. You asked about Bacthera and as we've stated in the past, Bacthera is not required for the launch. That additional capacity is intended to meet what we expect to be upside in later years and market expansion.

Excellent. Thank you very much for your answers. Appreciate it.

Your next question comes from the line of Peyton Bohnsack from Cowen.

This is Peyton on for Joe. Congratulations on the awesome quarter and the BLA submission and thanks for taking our questions. I guess maybe on the SER-155 program, will there be the option to include any initial efficacy data from the open-label cohort? Will this data include data from all 10 patients? And then previously, it was mentioned that there was the option to begin enrolling Cohort 2 before the 52-week safety data readout from the open label. Is that option only available after the upcoming safety monitoring review? Or have you already begun enrolling that portion of the trial?

Yes, Peyton. Good morning and thanks for you the questions. I think the question is what are we expecting to see with this first Cohort, including the question of efficacy data. Maybe I can ask Lisa to comment on the clinical side and Matt to comment on the microbiome side.

Yes. So the safety review is a planned meeting of the Data Safety Monitoring Board. And as such, it's mission and its charter is to look at any safety events to make a decision on whether it is appropriate and safe to proceed into Cohort 2. So, Cohort 2 would be planned to open immediately after that. I should say that in this particular study, we have some mixing, if you will, of safety endpoints and efficacy endpoints because we are looking at infection rates, et cetera. So we will get some information there but it will still be a live clinical database. So we have to keep that in mind. And as an additional note; recall that this is not just important for Cohort 2. It also gives us our first really comprehensive look at the safety in this really immunocompromised population. And that's really important with regard to our planning for other approaches into other populations that are similarly immunocompromised.

Good morning, Peyton. You've followed the company for a long time and Seres is a data-driven company. And as you know, our trials are designed to be translationally rich to empower our reverse translational discovery and development efforts. So the focus of Cohort 1, as Lisa noted and we talked about earlier today, is to evaluate drug safety and provide preliminary information on drug pharmacology. And that's the data that we'll be focused on. So data such as the engraftment of bacteria in 155 and potentially some other disease-relevant parameters. We haven't guided to the specific data we'll release in 2023. But I think as a company, we have a history of releasing key findings that we find from trials and getting that out there.

All right. Thank you guys so much and congrats on the quarter.

Your next question comes from the line of Ted Tenthoff from Piper Sandler.

Great. Thank you. Good morning. Congrats on the PDUFA and looking forward to the event in just a couple of weeks here. My questions are a little bit of housekeeping but I figured maybe we could discuss it on the call today so that we can get everybody in line. The expenses that are annual profit, that are attributable to the Tier 109 partnership are currently being recognized in that collaborative profit loss line in operating expenses, correct?

David?

Yes. So we are on a pre-approval prelaunch basis, Ted. We are covering those commercial expenses and think about what's in that collaboration profit loss as the additional amount that gets us up to 100% of those expenses. If we incur $5 million of expenses ourselves related to preapproval commercial activities and Aimmune incurs $3 million, then you're going to see the $3 million showing up in that profit loss piece collaboration.

So it's in that out. Got you. And then the question really has to do with -- as you launch SER-109 next year, it would be super exciting. Or as you achieve profit in the collaboration, will that line then float up to a revenue line? Or will it remain a negative profit line in the OpEx area?

Yes. So that's ahead of us. And we're working with our external auditors to nail down the exact accounting. But the way to think about that is: think about a post-approval collaboration P&L, of which we get 50% of that. And we will be working, as I said, with our auditors to figure out the exact disclosure of that 50%. It may be that the net effect of that is captured in a single collaboration profit or loss line or there may be additional breakout.

Okay, fair enough. We'll stay tuned and look forward to that and looking forward to the event in just a couple of weeks.

Thanks for the questions.

Your next question comes from the line of Mark Breidenbach from Oppenheimer.

I think we’ll probably hear a little bit more about this on December 8 but I was hoping you could remind us on the overall size of the field force you expect to deploy to support the launch? The number of sales reps, NSLs, et cetera? And are these going to be a Aimmune employees or Seres employees? And how many of these have already been onboarded in the advent of an early regulatory decision before the PDUFA date?

Yes. Mark, I think we missed the first couple of comments that you made but I think we got the gist of the question and maybe I can ask Terry to comment on sales force sizing and maybe Lisa can comment on the MSL side.

Sure. So Mark, we will, to your point, be providing additional depth and we will have Aimmune management as our guests on the December 8 event. So, I definitely invite you to attend that and put that in your calendar. But in general, what I can tell you today is that we will be seeking to reach the HCPs with the greatest potential for treating recurrent C.diff patients. This is a gut infection. So it's no surprise that gastroenterology and infectious disease specialists have the highest concentration of these patients relative to other specialties. You may also recall that Nestle have a currently deployed field sales team calling on gastroenterology today for their product [ph]. As we look forward to leveraging this expertise at launch and building upon it to include the top infectious disease prescribers and hospitals, we are planning to fully staff our field teams at this point on the Aimmune side. We’ll also be exploring efficient and effective ways of communicating with physicians in this sort of new normal, this post-COVID world. And Aimmune has significant expertise there because they have in line products. So we look forward to learning from them, finalizing our go-to-market model and more to come on the 8th. Back to you, Eric.

Yes. Lisa, do you want to comment on the MSL strategy?

Yes. So the MSLs have been fully deployed now for quite some time and they've been active not only at conferences but meeting with KOLs. Also, meeting with large GI and ID practices across the country. So I think between that and the very active publication schedule the med affairs group has maintained, that affairs group has been extremely active and ready for launch.

Okay. So it sounds like you don't necessarily need to make a bunch of additional hires in the near-term future, if I'm understanding correctly. And one other question for me is just on manufacturing capacity. Have you disclosed sort of in terms of doses per year, what the current capacity is for SER-109?

Yes, Mark, just to close out the first question. The answer is yes. As Lisa mentioned, the MSLs have been in the field for some time. Part of the attraction of working with Nestle and Aimmune was the existing GI infrastructure that we could leverage and not have to kind of build that capacity ourselves and wait as it sat idle until we turned it on with an approval. So we feel good about where we are there. David, maybe you can comment on the commercial piece.

Yes. So I don't believe we've guided any specifics but there are just a couple of things I could remind you about. So one, we're closely lined up with Aimmune in terms of forecast and I can tell you that we're comfortable with the amount of capacity we have and staying out ahead of that. And the other key thing that differentiates our product is that as we've said in the past, we're able to get hundreds, if not more, doses from a single donor for this product. So we have a lot of scalability given the highly purified spore nature of this product that we really think differentiates it as an oral medication.

Okay, super helpful. Congrats, again, on the progress.

Thanks for the questions, Mark.

Your next question comes from the line of John Newman from Canaccord.

Thanks for taking my questions and congrats on the progress with SER-109. I had a question on SER-109 regarding reimbursement. What I’m curious about is when the product is launched and eventually prescribed, do you foresee this being prescribed as an outpatient treatment? And the reason I’m asking is because if that is possible, I’m wondering if you could get around being included or considered as part of a DRG payment method in some of the hospitals. Just curious if you can talk a little bit about the dynamics there.

Good morning, John, thank you for the question. Maybe I can invite Terry to talk a little bit about the patient journey and specifically the outpatient nature of our expectations.

Of course and John, thanks for the question. The vast majority of these patients will be treated in the outpatient setting. So they will be going through the outpatient drug benefit versus the inpatient benefit that is governed by the DRGs that you referenced. And the reason for that… Eric referenced the patient journey. And it’s important to note that many of these patients do go in the hospital initially because they are so ill, it’s so acute and so abrupt. And they are then upon admission prescribed vancomycin which works to address the toxin product and therefore, the symptoms and it works quite quickly. So the second patient becomes symptom-free or markedly improved, they’re discharged from the hospital to finish their outpatient vancomycin regimen. And it’s upon completion of vancomycin, as you know, that they would then start SER-109. So that gives you some insight into the why behind SER-109 traveling primarily through the outpatient drug benefit. There’s also a significant number of patients and we saw these patients in our trials actually that are treated entirely in the outpatient. Back to you, Eric.

John, I think that provides our perspective.

Yes. Thank you.

Your next question comes from the line of Chris Shibutani from Goldman Sachs.

This is Stephen on for Chris. Thanks for taking our question. We’re wondering if you could provide your latest thoughts on how you and your partner Aimmune are thinking about pricing strategy for SER-109 if approved? And if we should expect any commentary around that subject at the upcoming Investor Day in December. And then, we noticed in the press release that an additional infection protection clinical program is planned for 2023. Can you just comment on what stage of development we should expect this program to be in? Just wondering if this will have clinical studies initiating in 2023 or potentially in later years? Thank you.

Yes, Stephen, thanks for the questions. Maybe I can start by asking Terry to comment on, in general, pricing strategy or maybe set expectations as to what we will talk about in a few weeks.

Sure. Well, we continue to take the months in the time that we have to work with our partners over in the Aimmune division of Nestle to achieve the right balance of representing the innovation and value we're bringing while ensuring patient access for the severely ill patients who really desperately need a better option. You may recall the high cost of C. diff infection to the health care system. Each patient on average is costing $34,000 a year. This high cost gives us an option to consider premium pricing but we'll be continuing our work in this area and potentially provide additional depth on our thinking in the December 8 event. Eric, back to you.

Yes, Stephen, maybe I can start with the second question and invite Matt to comment. But of course, as a company, our priority continues to be getting SER-109 to a regulatory approval and then preparing for launch. But at the same time, we are incredibly excited about what’s next in our infection portfolio. It starts with 155 but certainly it doesn’t end with 155. And we feel that as we made the decision last year to point our discovery engine into the area of infection and into adjacencies from C. diff, where we were bringing capabilities and knowledge and insights that we thought could improve our probability of success. We continue to be excited about the areas of unmet need that are ahead of us. And we think that a microbiome approach could be relevant and maybe Matt can comment further on that.

And I think we're moving rapidly in the infection space. And the reason we can move rapidly is both because we have a platform as well as the manufacturing capabilities with which to make these drugs, move quickly and get to the clinic. And also importantly, though, we have a very strong proof of concept with our SER-109 asset in the infection space. We've been able to mine considerable data out of a broad portfolio of patients from that, to learn about where those other therapeutic opportunities are in terms of other bacterial pathogens. And as well, then, been able to map quickly towards a clinical development feasibility and commercial feasibility for multiple different disease areas. We've been designing new lead candidates for a handful of different indications based on those kinds of strong data. So as I noted earlier, we see a real opportunity in immunocompromised patient populations which again speaks to the importance of the safety readouts coming out of 155 in the near term. And we have active programs in cancer neutropenia, solid organ transplant, cirrhosis, as well as a couple of others that we are working on. And we are anticipating launching an additional clinical program next year.

Thanks for the color. I appreciate it.

Thanks for the question, Stephen.

There are no further questions at this time. I will now turn the call back over to management for closing remarks.

Well, thank you, operator and thanks all for your time and attention this morning. A great deal of important progress this quarter and we look forward to updating you on our going forward progress, including at our December 8 event. So with that, operator, we can conclude this call. Thanks very much again for your attention.