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Welcome to the Seres Therapeutics Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kevin Mannix, Head of Investor Relations. Please go ahead.

Thank you, Dave, and good morning, everyone. Our press release for the company’s third quarter 2023 financial results and business update became available at 7:00 a.m. Eastern Time this morning, and can be found on the Investor and News section of the company’s website. I’d like to remind you that we’ll be making forward-looking statements, including the availability of cash to fund operations, the potential sales for VOWST, the timing and results of clinical studies, our ability to achieve sales targets 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 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’ Chief Executive Officer; Dr. Terri Young, Chief Commercial Officer; and David Arkowitz, Chief Financial Officer. In addition, Dr. Matthew Henn, Chief Scientific Officer; Dr. Lisa von Moltke, Chief Medical Officer, CMO, and Dr. Dave Ege, Chief Technology Officer, will also be available to address questions. With that, I’ll now pass the call over to Eric Shaff. Eric, please?

Thank you, Kevin, and good morning, everyone. By now, I hope you have all had the opportunity to read our press release, including the continued strong VOWST launch performance and our decision to implement a strategic restructuring. Since the beginning of the year, the innovation and perseverance of our team has been extraordinary, culminating with the approval and commercialization of VOWST in collaboration with Nestle Health Science. Everything we do at Seres has and always will be driven by a desire to support patients with unmet medical needs. It is the hope and resilience of each patient and their families that inspires us and drives us to fulfill our mission. VOWST is the perfect example of this. In VOWST, we have developed an incredible and unique option for patients battling recurrent C. diff infection, one with a strong efficacy and safety profile as well as motive administration. Today, VOWST is changing lives. It is improving the lives of not just the patients we serve, but their families. Now, with the significant success that we have had with VOWST, there also comes a profound responsibility to ensure that our ability to help recurrent C. diff patients is preserved. This has required us to make commitments, particularly in CMC and quality to continue and expand our ability to deliver VOWST to patients. The environment we find ourselves operating in, coupled with our desire to help patients in need, has resulted in our making the difficult decision to implement a significant corporate restructuring. We have been very thoughtful in our analysis. And after a thorough review, we believe that a substantial reduction in expenses and the streamlining of our organization is the best way for Seres to prioritize VOWST and support the company’s longer-term business sustainability. David is going to discuss the financials surrounding the restructuring, but I would like to touch on what it means for the Seres workforce. We are reducing the size of the current staff by approximately 41%. This is not an action that we take lightly. We have an extremely dedicated and talented team at Seres, many of whom have been pioneering microbiome therapeutics for more than a decade and who have been responsible for the construction of an unprecedented platform and knowledge base in microbiome therapeutics. We are deeply appreciative of the dedication and valuable contributions of our colleagues who have worked tirelessly and have successfully brought VOWST to the market as the first ever orally delivered microbiome therapy. Although the decision to restructure the organization is a difficult one, it is essential for positioning Seres optimally for the future. We believe that it starts with VOWST, which today is the first and only FDA approved orally administered microbiome therapeutic. Our teams are continuing to work alongside our collaborator, Nestle Health Science, to execute our launch strategy. And together, we have successfully delivered on the first full quarter of launch while laying the foundation for VOWST to become standard of care for preventing further CDI recurrences. We are seeing continued strong demand from a broad set of health care practitioners and across the recurrent CDI patient pool. Terri will cover our commercial metrics, but I am extremely proud that we achieved the 1,000th VOWST patients start in early October. We see substantial opportunity for growth given the broad label and robust clinical profile of VOWST, which makes it an appropriate choice for so many of the estimated 156,000 cases this year alone in the U.S. We see the potential for VOWST to reach significant levels of peak annual net sales, including, as we have previously said, the potential to reach or surpass the highest sales-based milestone threshold in the 2021 Nestle Co-commercialization Agreement of $750 million of sales. We’ve also announced our plans to support our ongoing SER-155 Phase Ib study to an anticipated clinical data set expected in the third quarter of 2024 with approximately 50 subjects expected to be enrolled in Cohort 2. SER-155 is a cultivated microbiome therapeutic candidate that is designed to prevent infections and/or GvHD in patients undergoing HSCT. You will recall, in May, we reported highly promising Phase Ib Cohort 1 clinical data with SER-155 well-tolerated in highly immunocompromised HSCT patients and an enteric pathogen overgrowth in only a single patient leading to a cumulative incidents that was markedly lower than that observed in a larger reference cohort of patients. If we look forward to data from the placebo-controlled Cohort 2 next year to confirm these results, meaningful findings and to gain insights on clinical outcomes and translational biomarkers that will inform a Phase II study. These results, if favorable, will provide another opportunity to create value for all stakeholders, especially patients. I would like to pass the call over now to Terri to cover the significant progress we’ve made, bringing VOWST to patients in Q3.

Thank you, Eric. I’m pleased to report that along with our collaborators at Nestle Health Science, we made significant progress on our launch priorities in the third quarter, building upon the already strong momentum from the previous quarter. These encouraging results support our view that VOWST can become a foundational treatment for recurrent C. diff infection and a highly significant commercial opportunity over time. In fact, with a strong HCP demand and patient access that you’re observing, it’s clear that VOWST is already changing the course of this disease for many patients caught in the vicious cycle of rCDI just months after approval. Today, I’ll provide an update on our 4 focused areas: Scaling HCP education efforts, creating a positive customer experience, establishing payer coverage, and optimizing hospital outflow. First, I’ll describe our HCP education efforts, which are focused on the importance of microbiome restoration in rCDI and the unprecedented efficacy and safety profile of VOWST. We have made significant progress in this area, supported by the promotional efforts of the Nestle field teams, which has now been deployed for a full 6 months post approval. Last month, we also participated along with our Nestle collaborators in both the Infectious Disease Week and the American College of Gastroenterology conference. We took the opportunity to broadly engage many of our leading KOLs at these conferences and the feedback we are hearing continues to embody excitement and a high level of interest in VOWST. As a result of our successful HCP education efforts, we have seen demand growth significantly in Q3 as reported to us by Nestle Health Science. In total, across both the second and third quarters, we received 1,513 completed prescription enrollment forms for VOWST, including 1,215 in the third quarter alone. Of the total second and third quarter enrollment, 934 culminated in new patient starts, including 837 in the third quarter alone. We received prescription enrollment forms from 698 unique prescribers between approval in September 30 with a continued split of approximately 70% from gastroenterology and the remainder from other specialties. Like in the previous quarter, we continue to see VOWST prescribers who are not on the Nestle field sales teams call list, in line with the high-unmet need and strong awareness across the provider and patient communities. Of the 698 HCPs who have prescribed VOWST, 129 of them have prescribed VOWST to more than 1 patient. As expected, the majority of utilization for VOWST in the early launch period has been in the multiply recurrent patient group. VOWST demand was also observed in patients with their first recurrence, and we expect this to grow over time as HCP stay in experience with an entirely new modality and develop an understanding of the foundational and distinct role that VOWST plays in preventing recurrence after completion of successful treatment with antibiotics. Our most recent market research supports this view and tells us that HCPs expect to continue to increase their use of VOWST over time. To grow breadth of use for VOWST, we continue to scale promotional efforts to deepen the understanding of the goal of VOWST across the recurrent-CDI population. For example, IDWeek, we launched an updated branded campaign for VOWST and subsequently trained the Nestle field teams and redeployed them to educate their HCPs accordingly. We are also increasing our investment in speaker programs, given the high level of interest we’ve seen from providers. We expect these efforts to translate into further growth in demand and, importantly, earlier use in the recurrent cycle at the time. In terms of providing a positive experience for patients and providers, our VOWST voyage hub continues with its mission of providing a high level of patient treatment and financial support. As expected, VOWST voyage significantly increased its successful conversion of enrollment to new patient starts in Q3. In terms of free drug utilization, we saw approximately 48% of the 934 second and third quarter new patient starts to spend via our free drug program. The use of free drug was mostly due to patient affordability challenges with co-pays or other cost-sharing requirement after the prescription was approved by their insurer. Our third focus area is engaging payers to ensure access and to date we have been pleased with the broad patient access we are seeing. In fact, more people have already gained access to VOWST than we had anticipated at this point in our launch, with the vast majority of patients able to gain access to VOWST through their insurer. As of September 30, we had received coverage for VOWST across approximately 50% of commercial and 35% of Medicare Part D lives and estimate that the remaining plans will issue coverage policies in the coming quarters. To date, we are seeing some coverage policies for VOWST that are quite broad for the approved indication and others with some utilization management restrictions. Through September 30, we saw 52% of our 934 new patient starts reimbursed through the patient’s drug benefit. Our gross to net rate remains modest with minimal discretionary rebates at this stage of the launch. David will say more about our gross to net rates momentarily. In summary, the vast majority of patients who are prescribed VOWST are able to obtain approval for the product, either through the medical exception process prior to a policy being issued or via a prior authorization. As the first recurrent demand for VOWST builds, we will continue to work with prominent payers to ensure that we preserve the broad patient access to VOWST that we are currently observing. Finally, the hospital selling team continues its efforts to enhance hospital outflow, and we believe that these efforts will begin to bear fruit later this year and into 2024. As of September 30, the hospital team had successfully engaged approximately 350 of the top volume hospitals more than once a month. We believe these conversations are critical to ensuring structural modifications to how rCDI patients are discharged. Education of hospital-based HCPs and development of protocols for rCDI that include VOWST will enable more consistent consideration of VOWST as patients flow from the inpatient to the outpatient setting. Ultimately, the hospitals will benefit as fewer patients return with recurrences, especially during the 30-day window after initial discharge where CMS financial penalties could be applied. These results representing our first full quarter of the launch so that we are off to a very strong start with the VOWST launch. While we are not completely surprised at the speed and magnitude of this early uptake, given the unmet need and the robust profile of VOWST, these results have exceeded the company’s expectations across multiple dimensions. We, along with our collaborators at Nestle Health Science, will continue our focus on HCP education, customer experience, payer coverage and hospital outflow and expect to see continued acceleration of demand and progress on our key priorities as we move through the coming quarters. As a result, we have confidence that we will ultimately achieve our goal of VOWST becoming a foundational therapy for rCDI, alleviating a significant burden experienced today by patients, HCPs, and the health care system. Now I’ll turn the call over to David for an update on our financials.

Thanks, Terri, and good morning. The details of our third quarter financials are included in the press release issued this morning. Before I provide an overview of our financial performance in the third quarter, I’d like to share some additional details on our restructuring plan that we announced this morning. We are focusing our business operations to prioritize the commercialization of VOWST and the completion of the SER-155 Phase Ib study. As a result, we are restructuring the company and undertaking a series of prudent and disciplined steps to significantly reduce spending across the organization in order to enhance our financial flexibility and liquidity. In total, we believe that these steps will result in between $75 million and $85 million of cash savings for 2024, excluding any onetime charges. These savings will be realized by reducing our workforce by 41%, which results in the elimination of approximately 160 positions across the organization, significantly scaling back all non-partnered R&D programs and activities other than the completion of the SER-155 Phase Ib study. Annualization of savings related to closing 1 of our 3 donor facilities supporting VOWST manufacturing that we announced earlier this year and continuing to drive VOWST manufacturing efficiencies, reducing G&A expenses and consolidating office space, including planned subleasing of existing space and the elimination of nonessential operating expenses. Seres anticipates incurring a onetime charge of $5 million to $5.5 million in the fourth quarter of 2023, primarily related to the workforce reduction. We believe the restructuring will yield significant savings for the company and position it for longer-term business sustainability. We ended the third quarter of 2023 with $169.9 million cash, cash equivalents, and investments. We anticipate that this cash balance in conjunction with the savings from the restructuring and the expected receipt of the $45 million tranche B under our existing term loan facility with Oaktree will support our operations into the fourth quarter of 2024. We are eligible for this tranche B until September 30, 2024, and it’s based upon the achievement of trailing 6-month VOWST net sales of at least $35 million and other applicable conditions. I would now like to discuss our financial performance for the third quarter, starting with VOWST. To remind everyone that Seres does not recognize VOWST net sales in its financial statements, but instead, we share equally with Nestle in the commercial profits and losses, and we record our share in collaboration profit and loss sharing related party. VOWST profits or losses are determined based on VOWST net sales, cost of goods sold, and sales and marketing expenses. VOWST net sales for the third quarter were very strong at $7.6 million based on 506 units of VOWST sold during the period to specialty pharmacies and distributors. The net sales reflect estimated gross to net reductions of approximately 14%, primarily due to returns reserve, prompt payment discounts, statutory discounts and rebates and limited discretionary commercial rebates. This gross to net reduction is an estimate based on certain assumptions and limited information will be refined over time as additional information becomes available. Seres is responsible for supplying VOWST inventory to Nestle. We received payments from Nestle related to their VOWST supply purchases to meet market demand. During the third quarter, Nestle purchased approximately $24 million of VOWST supply from us, and we received approximately $14 million in payments from Nestle during the third quarter related to these and second quarter purchases. We estimate that at the end of the third quarter, there was less than 2 weeks of VOWST inventory in the channel at the specialty pharmacies based on forward demand, which is typical for this stage of the launch and consistent with what we saw at the end of the second quarter. The total VOWST loss in the third quarter was $12.9 million, and our share of that was $6.5 million. This amount, our share of the VOWST loss for the third quarter, is recognized in our P&L in the operating expense section as collaboration profit or loss sharing related party. For the third quarter, we also recognized as collaboration profit or loss sharing related party as $7.3 million profit on the transfer of VOWST inventory to Nestle, and this amount serves to offset the $6.5 million that I just mentioned, which is our share of the VOWST operating loss. This profit on the transfer of VOWST inventory represents the supply price to Nestle, net of the cost of the inventory for the units sold and free goods distributed by Nestle during the quarter because the vast majority of this VOWST inventory was manufactured prior to approval, its cost was largely previously expensed and therefore the inventory value is low, resulting in the profit on the transfer of the VOWST inventory that’s close to its supply price. Over time, as the VOWST pre-approval inventories consumed the magnitude of this profit component from the transfer of inventory will diminish. Given that the third quarter was the first full quarter following the approval of VOWST, I want to spend a little bit more time reviewing our financial results for the quarter. Seres reported a net loss of $47.9 million for the third quarter of 2023 as compared to a net loss of $60 million for the same period in 2022. Total operating expenses for the third quarter of this year were $47.7 million as compared to total operating expenses of $62.6 million for the same period in 2022 and $76.9 million for the second quarter of this year. This significant sequential quarterly decline of approximately $29 million is primarily driven by an $18.5 million decrease in R&D expenses and an $8.1 million decrease in G&A expenses. R&D expenses for the third quarter of this year were $28.3 million as compared to $43.1 million for the same period last year and $46.8 million for the second quarter of 2023. These year-over-year and sequential decreases are primarily driven by VOWST commercial manufacturing costs no longer being recognized in Seres P&L following product approval, but instead capitalized and recognized on the company’s balance sheet. The sequential quarterly decrease was also driven by lower stock-based compensation expense in the third quarter of 2023 as the second quarter of 2023 reflected meaningfully higher stock-based compensation expense primarily due to awards with performance conditions that either started vesting or vested upon post VOWST approval. G&A expenses for the third quarter of this year were $20 million as compared to $18.4 million for the same period last year and $28.1 million for the second quarter of 2023. As we discussed during our last earnings call, G&A expenses for the second quarter of 2023 reflected meaningfully higher stock-based compensation expense, primarily due to stock awards with performed conditions that either started vesting or vested upon VOWST approval as well as approximately $4 million of onetime transaction and milestone payments due to third parties as a result of the FDA approval of VOWST. Thank you. And I will now turn the call back to Eric.

Thank you, David, and thanks to everyone for listening in. Before opening up the call for Q&A, I would like to say that we could not be more pleased with the initial performance of VOWST since its launch in June, and we are very excited to be bringing such an important medicine to patients in need. As I said at the start of the call, it is the desire to assist patients that drives everything we do at Seres. I have and continue to believe that if the company can softly create value for patients, that value will be recognized by other stakeholders, especially our shareholders. Unquestionably, we are creating value for patients. It is our goal and aim that through the prioritization of VOWST and the deliberate actions announced today, the value will be recognized. With that, I will conclude our remarks and open the line for questions.

[Operator Instructions] The first question comes from Joseph Thome with TD Cowen.

Congrats on the progress and best of luck to the team and those impacted by the restructuring. I know it’s always a challenging day. Maybe the first question, I know it was mentioned maybe that there were some utilization management restrictions in some of the payers that you’re working with. Maybe if you could elaborate that on a little bit more. And then second, just in terms of the prescriber base, maybe who are these early adopters, maybe that are using in more than one patient? Do they kind of fit a certain mold? And based on your field conversations, how are they using VOWST versus maybe like a REBYOTA?

So Joe, good morning, and thank you for the questions and utilization prescriber base. Maybe I can ask Terri to comment.

Right. So I think I want to start, Joe, by just doubling down on a key concept that I put forward in my prepared remarks, which is that we are very pleased with the patient access that we were observing during the first 6 months of launch. The vast majority of patients are able to obtain the needed approvals for VOWST through their insurer, either via the medical exception process, if there’s not a policy in place yet or via a prior authorization process that there is a coverage policy. So that, for us, is the most important outcome. And in fact, that outcome, it has exceeded the expectations that we had coming into the launch and is one of the key drivers of the launch performance. So in terms of the coverage policies that we’re seeing, I shared in my prepared remarks the percentages across commercial in Part D. We have some policies that it’s really a mix. We have some policies that contain little to no utilization management while others have very prescriptions and they really are sort of a mixed bag. But I think really the most important piece is that these claims are coming through. They’re being approved. And as you can see in our demand results in the new patient starts, they’re being dispensed either via through reimbursed claims from the payer or via our free drug program if the patient can afford the cost sharing that’s imposed by the payer. So I think that’s the most important piece for us. You asked about our prescriber base. Again, we continue to see a very broad prescriber base, both across specialty, as I shared, as well as across called-on and non-called on physicians. And the repeat prescriber base is also very broad. We’re seeing utilization across the patient base as well. So there’s nothing particularly distinctive or unique about the repeat prescriber base other than as in with any launch, you just get people who are ahead of the curve, they’re change agents, they’re willing to try new therapies, and those are the positions that we’re seeing.

The next question comes from Edward Tenthoff with Piper Sandler.

And really impressed by the launch and the launch dynamics taking place so far. I’m curious, as you look at the market, what is the opportunity to really expand outreach here? And is there anything else you guys think you can be doing just to access more patients. I know the strategy is to really get patients as they’re coming out of the hospital so, impressed by the launch so far, I just want to know if there’s any plan changes to how you’re doing that?

Thanks, Ed, thank you for the question and good morning. I think that there’s different phases that we think about, and we’ve talked about that in the past. We’re pleased with where we are in this first phase, where the profile of the drug really is leading us. And I think as Terri has talked about in the past, been really pleased with the breadth of prescribers that we’ve seen, which suggests to us that some of the efforts that we’ve done, including maybe some of the publication work is really kind of coming home. So -- but keep in mind, there’s additional opportunity with IRA. There’s additional top—opportunity for continued expansion. And maybe I can ask Terri to comment further.

Sure. Thanks for the question, Ed. A few things that I mentioned in my prepared remarks, I would just remind everybody of the fact that we were able to launch our branded campaign, the full launch campaign on the back of a prereview that we did a preclearance with the FDA. This is very typical for launch. We were able to do that, I think, quite quickly out of the gate—and, so launching that just this—or sorry, last month now in October, training the representatives very quickly in getting that scaled, including a full digital campaign. And that digital presence and Nestle has a full capability around this, right, because they’re not only in pharma. They’re used to reaching consumers effectively and engaging them and HCPs as well. We leverage that capability. So that campaign is very strong, and we’re scaling it fully. And that’s important because of the utilization that we’re seeing outside of the field representatives call list. So we want to continue to engage those physicians effectively. We are also scaling our patient campaign, and you’ll see a new patient campaign roll out imminently. Eric mentioned the IRA. So those are near-term efforts that the team is taking to really scale the outreach and engagement that we have with our key customers. The IRA, Eric mentioned, that’s a more medium-term opportunity. We expect to see the use of our income qualified free drug program drop as those IRA provisions come online in 2025 and more paid patients coming through and more demand coming through from the Medicare Part D segment.

Our next question comes from John Newman with Canaccord Genuity.

Why don’t we move forward, and we can come back to John later in the queue.

The next question comes from Tessa Romero with JPMorgan.

Can you clarify for us, for the 3 largest PBMs, what progress you’ve made? And are you able to give us a sense of cadence of the expected decisions here based on their cycles? And more broadly, where would you say payer coverage is tracking compared to your target?

Tess, good morning, and thank you for the question. Let me ask Terri to comment.

Sure. Tess, I’ll just reiterate once more that we’re very focused on the end outcome for patients, and we’re very, very pleased with the patient actions we’re seeing and the approval rates through patients’ insurers today and overall patient access. With respect to coverage, as I outlined, we’re seeing a mix of very little or no utilization management across health plans and PBMs to some utilization management. And you asked about expectations. This is very much as we expected. We did an enormous amount of payer engagement prior to the launch. So we’re feeling very good about the coverage that we’re getting. As you might imagine, Nestle is still in active discussions with many of these plans, including the PBMs, and we wouldn’t want to share additional details today that would disrupt those efforts in any way. But I’ll tell you, we may consider providing more granularity in the future once we have further progress on this front.

Our next question comes from Jeff Jones with Oppenheimer.

Can you give any additional granularity on how we should think about the savings breakdown that you described for 2024 in respect of R&D versus G&A spend? And then the second question is there any guidance on how we can think about a breakeven point in terms of net sales for the profit share calculation. And then of course, as you mentioned, that’s changing dynamically as your inventory calculations and accounting is changing now?

Yes, Jeff, and thank you for the question. Let me start, and then I’m going to ask David to comment further. But as it relates to the breakdown of the savings, I would say that with a 40% cut, it’s a pretty deep cut and just about all groups within the enterprise were impacted were affected and contributed to that cut. I would say it was not an across-the-board cut. We did take a disproportionate focus on, in particular areas of G&A, in areas of R&D with the idea of preserving and protecting our ability to not just support VOWST, but continue to support a growing top line. We have been incredibly pleased with what we’ve seen so far in terms of the track. And as we mentioned in our prepared remarks, actually even exceeded our expectations in terms of the launch. So from an R&D perspective, as we noted in the comments, we are focused on continuing to support the Cohort 2 part of the Phase I study from 155 to a readout, which we expect in the third quarter. We saw some incredibly interesting data from the first cohort. If we’re able to replicate what we saw in the first cohort and the second cohort and together between the 2, we think that’s interesting for that indication, but also to open up other areas within, for instance, AMR. That said, we are incredibly focused in R&D on that. So we are pausing our activities elsewhere. We do think there’s an opportunity to reengage. But for the time being, our focus is really on VOWST, maybe I can hand it over to David.

Yes. Thanks, Jeff. Thanks, Eric. Yes, Jeff, let me give a little bit more granularity. So the reduction in force is generating at about $75 million to $85 million in 2024, cash saving, it’s generating about $35 million of it. So that’s about 40% of that total range. Another 40% is coming—roughly is coming from R&D expenses and then the remaining 20% coming from G&A expenses and other activities. As it relates to—I can also add—just provide a little bit more color on your breakeven question. If we just look at the Q3 results, as we talked about, VOWST collaboration had a total loss of $12.9 million, and that was on a base of $7.6 million in sales. So COGS and sales and marketing expenses for the quarter were about $21 million. So that’s just 1 quarter, our first full quarter. So I would caution folks in extrapolating that extensively, but it just gives you some additional insights on the level of support required to drive sales early in the launch.

Our next question comes from Keay Nakae with Chardan.

Two questions. First, in terms of the reimbursement discussions, is there specific areas where you hope to see some—the next tranche of wins? And then the second question with respect to the next tranche from the debt facility beyond the sales metric, any other conditions that are notable that you need to qualify under in order to get that tranche?

Yes, good morning, and thanks for the question. On the reimbursement piece, I think Terri hit that beforehand, but maybe a quick response from Terri, and then I’ll ask David to comment on the debt tranche.

So I guess one thing to add is our focus, as a reminder, has really been on the commercial plans in the commercial business because of the Part D mandated contracting cycle and the contracting window they’re having passed for ‘24. So we’re very focused on commercial and those particular plans, it’s not like there’s a bolus of them come online at any given time. They come online month-by-month by month. So we expect to continue progress across the commercial space as we move through Q4 in the first half of next year with a steady pace.

David, on the debt question?

Yes, there’s really no other meaningful applicable conditions. There is a requirement of low single-digit quarter-over-quarter sales growth, which we’re in, obviously, ramp mode here as it relates to the vast launch. So we do not view that as particularly notable.

Our next question comes from Chris Shibutani with Goldman Sachs.

This is Stephen on for Chris. We had a couple of questions. First on the VOWST launch. Can you comment on the utilization trends, particularly thinking about the split of patients between the inpatient versus outpatient setting? And then if there is a differential response from payers approving reimbursement in those 2 settings. And then on the restructuring, there’s—I’m hearing some cognitive dissidence given that you’re framing the VOWST launch is very successful, but on other hand there’s restructuring. So is this more coming from the pipeline just not generating more near-term commercial opportunities? Some color around that would be helpful.

Stephen, maybe I can ask Terri to hit the first one, and then I’m happy to answer the second one.

Sure. So with respect to reimbursement, again, I keep emphasizing the outcome we’re so pleased with that the vast majority of patients can get access to VOWST via their insurer today. We’re very pleased with that exceeded our expectations. With respect to inpatient and outpatient use, even the inpatient segment that we are focusing on -- the hospital team is focusing on creating access for those patients receive VOWST through the outpatient drug benefit. So they’re really in terms of reimbursement and the drug benefit, they don’t behave any differently than a true outpatient who is both diagnosed and fully treated in the outpatient setting, the same set of insurers. So that patient access, again, we continue to be very pleased with.

And then, Stephen, on the second question, maybe I can just share how I think about this. And certainly the notion that we’re not pleased with the productivity in the R&D side of things is absolutely not the case. And I think VOWST is our best example of why. We did not have a straight line with VOWST from Phase I to Phase III, but we had incredible science, incredible commitment, perseverance through adversity, including a pandemic. And ultimately, we believe that we’re changing patients’ lives and their family’s lives because of that. So we absolutely believe that there is utility of our technology well beyond recurrent C. diff infection. And the next step of that, we believe, is 155 with some really interesting early data that we saw earlier this year, but we are in an incredibly challenging environment. And we think that the responsible thing for us to do as a team is to ensure that we’re focusing on VOWST, which, by the way, we think has a particularly attractive return profile given the launch trajectory and also being really cautious and careful and focused as to how we’re deploying finite resources. And perhaps when the environment improves, we’ll think about broadening the aperture but we think that’s a responsible thing to do right now for shareholders and for patients. So that’s the underlying thinking behind our action.

The next question comes from John Newman with Canaccord Genuity.

John, I think it sounds like we’re having some trouble with audio, but we’re happy to connect with you and take your questions anytime.

All right. This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Well, thank you, Dave, and thanks to everyone on the line for your attention this morning. We look forward to keeping you updated on our progress. We hope everyone has a good week. Thanks very much.