Seres Therapeutics Inc (MCRB) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Seres Therapeutics, Inc. fourth-quarter and year-end 2015 financial results call. At this time, all participants are on a listen-only mode. (Operator Instructions). As a reminder, this call is being recorded. I would now like to turn the call over to Carlo Tanzi. You may begin.

Thank you and good morning. A press release with the Company's fourth-quarter and full-year 2015 financial results became available at 8 AM Eastern Time today and can be found on the investors and media section of the Company's website. We have also posted slides on our website that follow the discussions related to this call.

Before we begin, I would like to point out that we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about our future expectations, the sufficiency of our cash, cash equivalents and investments to fund our operations, the commercial and financial potential of our agreement with Nestle Health Science, the potential impact of our microbiome therapeutics platform on disease, the progress and development of our product candidates, our position in the marketplace, the potential for rapid adoption and cost savings of our products, clinical development and regulatory approval, the potential of our manufacturing capabilities and the timing of clinical trials and related data.

Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section of our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2015 and our other reports filed with the SEC.

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, I am joined by Dr. Roger Pomerantz, Seres' President, CEO and Chairman and by Eric Shaff, our Chief Financial Officer. I will now pass the call over to Roger.

Thanks, Carlo and thank you all for joining us this morning. It has been a remarkably productive year for Seres. Seres has made great progress in its efforts to develop a totally new field of medicine using Ecobiotic microbiome-based therapeutics. We are working to create a true paradigm shifting therapeutic approach that uses bacteria to treat disease. We have a lot to discuss today.

As I begin, I think it may be helpful to frame today's remarks and Seres' recent progress into two overarching themes. One theme relates to the tremendous progress that Seres has made as we prepare for the expected commercialization of our product candidates. The second theme that we will discuss relates to the progress the Company has made in expanding its pipeline into new therapeutic areas.

Our vision for Seres is to pioneer the development of microbiome therapeutics harnessing this novel modality to address serious -- let me say that again -- serious diseases in multiple areas of medicine.

Let me begin by discussing several of our recent accomplishments. First, we have successfully completed a Phase 1b/2 study of SER-109 in patients with multiply recurrent C diff infection. Earlier this month, these results were published in the Journal of Infectious Disease, a leading journal for physicians on the front line who treat C diff. To recap, the Phase 1b/2 study, this was a 30-patient, open label study that demonstrated that an unprecedented 97% of these patients, or 29 of 30, achieved the clinical cure being defined as not experiencing a recurrence of C diff infection.

This was a remarkable result that spans in stark contrast with the 25% to 30% cure rate expected with standard of care antibiotic therapy alone. With these study results, we have demonstrated the potential of SER-109 to break the backbone of the recurrent C diff infection cycle that so many patients suffer from in the US and around the world.

Based on these compelling SER-109 clinical data and the lack of any approved therapy for recurrent C difficile infection, the FDA granted SER-109 both breakthrough therapy status and orphan drug designation. We have since advanced SER-109 into a placebo-controlled Phase 2 study in 36 centers throughout the United States and we continue to expect to report top-line study results in the middle of this year. We expect that SER-109 will be the world's first approved microbiome therapy and we have made excellent progress as we prepare to reach the market globally.

Seres recently hired Wael Hashad, an experienced pharmaceutical executive, as our Chief Commercial Officer. Wael comes with deep marketing experience and he is a very strong addition to the Seres leadership team. We also announced last month that Seres has entered into a strategic collaboration with Nestle Health Sciences and I will discuss this transformational event in a few minutes.

More broadly, Seres has made tremendous progress in hiring key talent across the Company during the past year. I have been very pleased with the exceptionally high quality of experienced professionals we've been able to recruit. Our research team now includes a number of the world's leading microbiome and metagenomics experts. Our clinical group includes highly accomplished individuals with experience leading complex development programs for a number of marketed therapeutics.

We have also been successful in creating a world-class manufacturing group that we believe is capable of providing a reliable supply of high-quality biological therapeutics from preclinical development to drug launch. The advanced capabilities, experience and proprietary know-how of our CMC team is a core competency for the Company and this is an area we expect to continue to provide a deep competitive advantage.

Turning to other corporate highlights, in June of last year, we took Seres to the market and raised $139 million in a highly successful IPO. We believe the Company is now well-funded and has the resources to advance multiple R&D programs each holding promising opportunity and further buildout of our capabilities.

We have also further strengthened our intellectual property portfolio. We recently obtained our fourth patent in the United States, a method-of-use patent covering combinations of bacterial spores that has further strengthened our patent estate. Together with our first-mover advantage, proprietary know-how and trade secrets and regulatory exclusivity protection, we believe that Seres has strong intellectual property covering our technology.

More recently, we announced two major milestones that I'd like to discuss in more depth, including the Nestle Health Science deal announced last month and the start of our phase 1b trial of SER-287 in ulcerative colitis.

The Nestle Health Science transaction represents a strategic collaboration for Seres that will help maximize global patient access to Seres microbiome therapeutics. We also believe that the transaction was quite attractive from a financial point of view providing compelling short-term economics and generating the potential of substantial longer-term value.

Through the agreements, Seres has licensed rights to our microbiome therapeutics for two indications -- C diff infection and inflammatory bowel disease. The transaction provides Nestle with rights for markets outside of the United States and Canada. Notably, Seres continues to retain full rights in the United States and Canada for all of our product candidates and we retain global rights for all other indications outside of C diff and IBD where we are actively working and considering future development.

This includes infectious diseases beyond C diff, G.I. diseases outside of IBD, metabolic diseases, immuno-oncology-related programs, as well as rare genetic diseases. Strategically, we believe that that Nestle Health Science is an ideal partner for us. They are well-positioned to commercialize C diff and IBD microbiome therapeutics outside the United States and Canada given its vast global reach and an existing pharmaceutical marketing presence.

Nestle Health Sciences has an existing specific focus in gastroenterology and acute care with an established salesforce and medical science liaison team. We are pleased to have Nestle Health Sciences as a collaborator and we believe they will help Seres bring drugs to patients that need them across the globe.

In exchange for the licensed rights provided, we believe Seres has obtained very favorable financial terms. Seres received $120 million upfront with an additional $30 million in milestone payments expected to be earned during this year of 2016. They are associated with the initiation of a SER-109 Phase 3 study and for the initiation of a SER-262 Phase 1b trial.

Seres retains a meaningful financial state and product development and commercialization success in Nestle Health Science territories. The full potential value of the upfront payment and the milestones is over $1.9 billion, assuming all products have regulatory approval and are successfully commercialized.

In addition, Seres would receive tiered sales-based royalty from the high single digits to the high teen percentages. Furthermore, Nestle Health Science has agreed to fund 33% of global development activities, including global Phase 3 trials for SER-262, 287 and SER-301.

We believe this was a great deal for Seres. Nestle Health Science will support the global success of these targeted product candidates. In addition, we believe that the financial capital influx from this agreement expected to total $150 million in 2016 will provide Seres with the resources to aggressively pursue our strategic plan and rapidly advance multiple therapeutic candidates in new indications.

During the quarter, we achieved an important milestone in advancing these efforts as we initiated a Phase 1b study evaluating SER-287 in ulcerative colitis. This is the first human trial of a microbiome drug candidate in a chronic disease. Ulcerative colitis or UC is a very serious disease impacting approximately 700,000 patients in the US alone. UC is characterized by inflammation of the colon and the rectum and often results in debilitating symptoms, including abdominal pain, bowel urgency and bloody diarrhea. In serious cases, UC can lead to surgical removal of the colon and even death.

Our SER-287 program is a biologically-sourced therapeutic candidate that has been specifically and specially formulated for chronic oral administration. I would like to discuss our rationale for pursuing UC, as well as the study design and objectives in some additional detail.

Advancing SER-287 into clinical development for UC is supported by preclinical studies performed in our labs in two animal models of colitis that provide evidence that SER-287 administration results in reduced pathology. In addition, several published clinical reports indicate that modulation of the microbiome through repetitive fecal microbiota transplants may lead to meaningful clinical response in certain UC patients and a complete clinical remission in a sizable number of treated patients.

Scientifically, the prevailing hypotheses linking UC and the microbiome asserts that products made by a healthy microbiota can enhance the barrier properties of colonic epithelium while increasing the activity of regulatory T cells, Tregs, that modulate inflammatory immune responses. Loss or dysbiosis of this healthy microbiota leads to mucosal tissue damage and localized inflammation.

Our objective with SER-287 is to develop an effective and safe therapy, which is not immunosuppressive to benefit UC patients who have not yet transitioned to biologics or other immunosuppressive agents. Immunosuppressive agents are known to place patients at greater risk of opportunistic infections and certain cancers and avoiding this risk would provide an important benefit to these patients.

Furthermore, a sizable fraction of UC patients are not adequately treated today and we believe the market opportunity within this population could be very meaningful. The ongoing SER-287 Phase 1b trial is a placebo-controlled study with multiple arms that will evaluate both daily and weekly dosing of SER-287, as well as the impact of vancomycin pre-treatment. The study is designed to be conducted in 20 centers with 55 patients having active mild to moderate UC who are not responding to their current therapeutics. The primary objective of this study is to evaluate change in the composition of the intestinal microbiome at eight weeks.

We will also measure safety and tolerability, as well as a number of important secondary endpoints, including clinical response, endoscopic improvement, change in serum and fecal biomarkers and immunological and pathological changes in mucosal biopsies. Multiple SER-287 clinical sites are now open and the study is actively recruiting patients. We intend to provide timing guidance for study readout in the future once we are able to better assess enrollment rates.

Beyond the current UC study, we are evaluating further developmental efforts of SER-287 as a UC maintenance therapy. We are also considering development of SER-287 in other forms of inflammatory bowel disease, including Crohn's disease. As with C diff, we are actively developing follow-on synthetically manufactured therapeutic candidates for inflammatory bowel disease such as SER-301.

So as you can tell, we have had a very productive year in executing against our plan. With that, I'd like to now pass the call to Eric to review our recent financial performance.

Thank you, Roger and good morning, everyone. Today, I will review our fourth-quarter financial results. I will also provide an overview of our operating expenses, as well as provide an update on our balance sheet. We reported a net loss of $19.6 million for the fourth quarter of 2015 as compared to a net loss of $8.5 million for the same period in the prior year. The increase in net loss was driven by continued growth in clinical and development spend related to SER-109 and SER-287, increased headcount, ongoing development of our microbiome therapeutics platform, as well as increased facilities costs in connection with the leases we entered into in 2015.

Research and development expenses for the fourth quarter were $13.9 million as compared to $5.1 million for the same period in the prior year. The increase in R&D expense was primarily due to expenditures in connection with our microbiome therapeutics platform and clinical development of SER-109 and SER-287.

G&A expenses for the fourth quarter were $5.9 million as compared to $2.2 million for the same period in the prior year. The increase in G&A expense was primarily due to our continued investment in business personnel and facility expansions to support overall growth, as well as increased professional fees, including those associated with the Nestle Health Science collaboration and other costs associated with operating as a public company.

We believe the Company's financial condition is strong. We ended the fourth quarter with approximately $205 million in cash, cash equivalents and investments, which does not include the $120 million upfront payment received after the close of Q4 from Nestle Health Science.

During the fourth quarter of 2015, Seres signed an agreement to lease a facility that will house its corporate headquarters, including laboratories, office space and a pilot manufacturing facility. We expect the pilot facility will represent a key addition to Seres' existing manufacturing network, broadening capabilities in bioprocess development and manufacturing and in particular the production of synthetic microbiome product candidates. The Company expects that buildout and equipment related to the facility will require approximately $20 million of cash outlay during the first three quarters of 2016.

CapEx for the fourth quarter totaled $3.5 million to support increased lab activities and expand internal manufacturing capabilities. Based on our current operating plan, we expect that our existing cash, cash equivalents and investments will enable us to fund operating and capital requirements, excluding cash inflows or outflows from business development activities, well into 2018.

To sum up, we are very pleased with the Company's current financial resources. We intend to aggressively advance our pipeline while taking a disciplined approach to the investment of cash in the growth of our Company. I'll now turn the call back over to Roger.

Thanks, Eric. This has been a remarkably productive period for Seres where the Company made great strides in establishing itself as leading the development of microbiome therapeutics both in the US and around the globe. We expect though that 2016 will also be a very eventful year for Seres where we expect to achieve several important R&D milestones.

I'd like to highlight several of these anticipated events. For SER-109, the enrollment of our Phase 2 study in patients with recurrent C diff infection is moving forward with alacrity and we expect to report top-line data in the middle of this year. Because of our breakthrough therapy designation for SER-109, the FDA has been highly engaged in the development of this program. We intend to review the SER-109 study results with the FDA to promptly determine a plan to move this therapeutic candidate to patients as rapidly, but as safely as possible.

We plan to initiate a single global Phase 3 study for SER-109 in patients with recurrent C diff infection and assuming successful results from the Phase 2 study, we anticipate initiating the Phase 3 study in the second half of this year. Once we see the results of the Phase 2 and obtain final regulatory feedback on study design, we plan to provide more information about the Phase 3 study size and design.

Turning to some of our other R&D efforts, our broader strategic plan is to transition from the development of biologically-sourced therapeutics to the development of synthetically-derived fermented microbiome therapeutics. There are several advantages to using a synthetic approach. Synthetically-derived product candidates can be scaled up to meet global demand in a reliable, reproducible manner with well-defined characteristics. Based on our metagenomics expertise, proprietary in silico algorithms, world-leading proprietary bacterial library and field-leading manufacturing capabilities, we believe we can design synthetically-produced microbiome therapeutic candidates for specific target indications.

Importantly, we believe our capabilities provide Seres with a competitive advantage in developing synthetically-produced microbiome therapies in multiple therapeutic areas. Our most advanced synthetic product candidate is SER-262 and it is being developed for patients with primary C diff infection. The prevalence of primary C diff is substantially larger than recurrent CDI with an estimated US prevalence of between 640,000 and 820,000 patients.

SER-262 is comprised of a selected number of strains of bacterial spores that were rationally chosen based on metagenomics modeling, bacterial characteristics, as well as favorable preclinical results of the final candidate compared to over 100 other initial candidates. In an animal model of C diff, SER-262 has shown significant potency, similar to SER-109, including protecting against mortality and weight loss due to this infection.

We have made excellent progress with the SER-262 program, including productive discussions with the FDA. We continue to expect to initiate the Phase 1b study in patients with primary C diff in the middle of this year. We soon expect therefore to have two therapeutic candidates in the clinic for C diff infection -- SER-109 and SER-262. And I'd like to touch upon the commercial opportunity we see in this indication.

To remind you, C diff is a very serious disease where current therapeutic approaches have major limitations. In the US alone, approximately 30,000 patients lose their lives each year to C diff and hundreds of thousands more face terrible suffering, multiple hospitalizations.

Currently, there is no approved therapy for multiple recurrent C diff patients. Unlike antibiotic therapeutics that demonstrate limited efficacy and only treat a single C diff episode, Seres' microbiome therapeutic candidates have the potential to provide a dramatic improvement in the clinical outcome. In addition, the Seres microbiome approach aims to treat the underlying or proximal cause of the disease and thereby break the cycle of recurrent infections that C diff patients experience.

From an economic perspective, we have performed pharmacoeconomic analyses with input from leading physicians, payers and hospital pharmacists. While it is premature to discuss potential pricing, we believe that our therapeutic candidates have the potential to create very significant value.

Published pharmacoeconomic studies demonstrate that C diff infection for hospitalized patients can result in an additional cost of approximately $18,000 to $26,000 per hospitalization. A patient experiencing a series of recurrent CDI episodes can cost the US healthcare system over $50,000. We believe that breaking the C diff recurrent cycle with our highly innovative therapeutic approach would therefore generate significant value.

Before I conclude, I would like to discuss some of the other indications beyond C diff and inflammatory bowel disease where we are focusing our research efforts. The science and clinical evidence linking the microbiome with an array of human diseases continues to grow at an astounding rate. In prioritizing indications, we thoroughly evaluate the strength of supporting preclinical and most importantly the human data. We seek data showing that a relevant intervention in humans or animals such as antibiotics or fecal transplants can meaningfully alter the course of a disease.

One example of this are the recent published studies showing that repetitive fecal transplants can result in remissions in active ulcerative colitis. These data ultimately convinced us to pivot towards treating ulcerative colitis with SER-287. To not lose focus, our efforts, including targeted rare genetic diseases, continue to be focused in our three primary therapeutic areas -- infectious disease, inflammation and metabolic disease.

As I conclude my remarks, I will reiterate the remarkably productive year it has been for Seres in our efforts to develop a new field of medicine. We remain excited and energized to continue and expand on this progress into 2016. Operator, let's now open the call for questions.

(Operator Instructions). Joe Schwartz, Leerink.

Good morning. This is (inaudible) filling in for Joe. I have two questions. Congrats on all the progress first. Two questions. One on the broader strategic plan. Can you help us understand, as you highlighted, there's a lot of excitement in the field, there's a lot of new publications coming in. Fecal microbiota data is driving the direction in which the diseases that you are looking at, but can you help us understand how your broader strategic plan helps identify which particular programs you prioritize over the other in a given timeframe, particularly leading up to your 2018 cash runway?

How do you look beyond FMI and UC and in particular the other programs that you highlighted given you also have internally biologically-sourced approach and you also have the synthetic direct approach? I have a follow-up on UC program in particular. Thanks.

Okay, I appreciate it; that's a great question. Let me try to answer it by examples. I'll give you two new programs that I think are worth highlighting and it shows how we address new areas in the ways that you were talking about and as we did with UC.

So first, there is increasing evidence from Sloan-Kettering and other major cancer centers that an unhealthy microbiome is associated with increased mortality. I'm going to say that again -- increased mortality following allogeneic stem cell transplantation. These deaths due to infections, especially bacteremia and graft versus host disease, are driven by a colonic microbiome dysbiosis resulting from heavy use of antibiotics during the transplantation procedure.

Seres is designing SER-155 as a treatment to reduce mortality, to reduce mortality due to GVHD and infections in these highly complex and highly ill patients. Of note, from our SER-109 trial, we have demonstrated that when we repair the dysbiosis, we can decrease or ablate carriage of pathogenetic and resistant bacterial species in the colon. That's one example.

Number two, there is now a growing understanding that primary bile acids metabolize by the microbiome into secondary bile acids play critical roles as true endocrine-signaling molecules in metabolic and liver diseases, including but not limited to NASH. NASH is expected to become the number one reason for liver transplants in the US and we are exploring the role that the microbiome therapeutics in NASH and related deliver diseases tying into the use of a primary to secondary bile acid metabolism.

Based on -- and we have data based on some initial preclinical data sets that are now in our laboratories' hands. We expect to make major advancements in these programs and I'd keep your eye on these too. They are illustrative of how we think about the disease, how we go after it and how we prioritize. I hope that helps the first question. You said you had a follow-up on UC.

Yes, great. That's very helpful, thanks. Maybe just to follow up on this. Any guidance for timelines for these additional programs? I guess you are working on the synthetic approach for developing molecules for that if I'm not mistaken.

Yes, SER-155 is a synthetic approach, so that's exactly correct. And we haven't given timelines of when it will be in patients, but you've seen how we move with some alacrity when we have good human and animal model data. We did it with 287, expect to see news on these programs as we move forward this year.

That's very impressive. And on UC, in particular, thinking about the development strategy going forward, as you highlighted, some of the secondary endpoints are the ones that are really used for registration. So given your approach and given the mild to moderate UC indications that you are (inaudible) doesn't really have a lot of precedence in drug development. So how are you thinking about the next step if you already started thinking about that?

It's a great question. So yes, for the first microbiome oral non-immunosuppressing agent, why did we look here? It made sense for the high unmet medical needs of patients and it made sense based on the pharmacoeconomics. These are patients who are failing first-line therapy, which is mainly 5-ASA plus/minus steroids. This is before they go into immunosuppression, but they are failing it, mild to moderate and inactive, not in the maintenance phase. As I said, we will look at that later. This is the high unmet medical need and that's why we picked this area.

Why we picked UC versus Crohn's was clear to us and to our KOLs. Anyone who has seen these patients as I have, Crohn's is a heterogeneous disease. It does not have a clear path to registration based on how you look at Mayo Clinic scores and such. UC is homogeneous, it's limited to the colon, it is tractable, it is easy to monitor with mucosal biopsies and it is a disease that has a clear therapeutic and regulatory path. I hope that helps.

Very helpful, thanks again.

John Newman, Canaccord.

Thanks for taking the question. On the UC study, I'm just curious, in addition to the primary and secondary endpoints that you mentioned, what will you be able to learn about the specific characteristics of the different patients? And the reason for the question is I'm wondering if you think that you will be able to design one therapy to treat all the different patients regardless of the specific differences in their -- in the environment in the gut.

It's a fantastic question, John. I think you nailed more overarching things that people who have talk to me realized I care a lot about understanding that many of these diseases, not chronic diseases, not just UC, not just Crohn's, diabetes, asthma. Most of these diseases are syndromes. What that means is you have to dissect out the molecular disease states within these 19th century syndromes. Inflammatory bowel disease is a primary example.

To that point, one of the most important things in getting good biomarkers, whether they are human host biomarkers, inflammatory biomarkers or microbiome biomarkers that we are going to use Prometheus, the company that's associated with Nestle Health Sciences we try to design biomarkers for, you have to look at this as a set of patients that have really different molecular diseases, to your point.

I believe strongly that we can help groups of patients, significant groups of patients by using the microbiome approach. Figuring out who they are -- so you have a pay-for-performance approach and then to your point dissecting out whether some need a different personalized microbiome approach different from just 287 or 301 is going to be part of the excitement here. This is a whole new way of looking at the disease and I shouldn't even use that term -- of looking at these syndromes.

One of the things that makes me excited as a doctor is that the microbiome approach will allow us to finally start to dissect out the disease states that are within these syndromes. We think that your question is a critical one and takes up a lot of our time as we move into these more chronic syndromatic diseases.

Great and just one quick follow-up, if I may. Will you be able to follow the patients after the eight-month analysis point? Will you still be able to track them past that to see how they are doing?

Yes, that's exactly what we're going to do, just like we did -- as you see, the SER-109 initial study was really only for eight weeks, but we tracked those patients, a lot of those patients, out to six months. We are very devoted to showing, especially in a chronic disease, how robust this is, how long-lasting it is, where maintenance therapy would take place. We think though that we have a much better POS with doing a chronic disease that's more complex like ulcerative colitis and then potentially Crohn's because we did SER-109 in C diff and we learned not only things about the science, but how to follow patients, how to evaluate them long term after a study has officially quote/unquote stopped.

Great. Thanks, Roger.

Tazeen Ahman, Bank of America.

Just one question from me on 109 here. So you have tremendously positive data in what you have presented so far and you've got a well-designed trial that's going to read out in the middle of this year. And given the fact that you already have breakthrough status, what do you think the receptivity would be from FDA assuming that the results are close to what you got in the last trial for them to potentially consider this trial as your pivotal and you not needing to have to run a Phase 3?

It's a great question. Always with great drugs with great data, you want to get to patients as rapidly, but as safely as possible. As you know, I've had a lot of experience with this. I am now -- I've led great teams that we've now brought nine drugs to FDA approval, all infectious disease drugs. I can tell you from what I learned there is you never go to or say -- you never put words in the FDA's mouth nor do you go to them without data.

So what I'm going to do is we will have the readout as we assume and expect it will be good. We will take that data, I will and talk to the FDA about how we can get this drug as rapidly but as safely as possible to patients knowing that there's no other drug in the field. So stay tuned, but that's our plan.

Have you -- has there been any preliminary talk about potential of that or are you just waiting to see what your data looks like?

Yes, we don't really talk about day-to-day interactions with the FDA, but I must tell you and as I said in my little talk, the ability to get breakthrough and orphan has opened up a lot of communication doors where we've been able to move things forward. Even before Phase 3, we now have release specs for the final formulation approved. We are using in Phase the release specs and the analytics. That will be the same formulation for launch, so no bridging studies. So I'll just highlight the fact that getting -- I must say getting these designations does accelerate the development of the drug.

Okay, great. And then maybe one question on the UC study. In terms of its design, you've chosen eight weeks. Is that sufficient time in your view to be able to answer the questions that you are looking for? And maybe can you just give us a little bit of your view of -- there's a lot of data available in published journal articles about the efficacy of using FMP-type therapies with C Diff, but we haven't seen as many publications in relation to things like UC or Crohn's. Maybe talk to how the design of your trial gives you confidence that this is something that could really have potential.

Yes, no, great questions, Tazeen. Just to deal with one of the last first, the reason I think -- if you looked at the medical literature, for years, people have had anecdotes, these case reports of people with UC and Crohn's, mainly UC, getting fecal transplants, getting better and then getting worse again. You see that for years in the medical literature.

The last couple of years, at least three groups that we know of, two in North America, one in Europe, have done repeated fecal transplants. I think that is arduous but brilliant because that's what shows that in a chronic disease as opposed to this one and done in an alien pathogen infectious disease like C Diff you needed constant treatment of this ongoing inflammation. It makes sense scientifically as well since the [clospidialities] supposedly talk by short chain fatty acids to Treg and you have to do it over and over, not just one and done like an infectious disease. So it all makes sense on an empiric level. That's why I don't think you saw as many trials with multiple fecal transplants. It's pretty new and it's multiple as opposed to singular.

To get your point about our trial, which I agree, the first trial for eight weeks is what both the regulators and what our KOLs suggested. It is the time period where you see remissions if you use any of the approved drugs all the way to TNF inhibitors. So we are not reinventing the wheel; we are actually using an initial trial that you would use in another approach looking for induction of remission. Then we will think about the drug as a maintenance, which we think is highly interesting as a maintenance therapy, but those are longer, more costly and so we start here at the highest unmet medical need.

I think eight weeks is what we've heard. We are looking for remission, we are looking for meaningful changes clinically in the Mayo Clinic scores and most importantly, we are looking for biomarkers that help us segregate this syndrome into disease states. And again, we expect this to be a data-intensive therapy study. We are scoping these patients at the beginning. At the end of the trial, they are getting mucosal biopsies. We are looking at immunophenotyping, at microbiome biomarkers. Expect not only clinical data, but lots of very important translational medicine data coming out of this first trial.

Okay, thanks for that color. I know you said that you have started a trial. You haven't provided timing, but would it be reasonable to expect that it would be sometime this year that we could see that data?

Again, I never do finger in the wind. I've done this too many times for recruitment. Once we see the slope that is meaningful, we will get you base case upside, downside and we will leave it at that. I can assure you as you see how fast Seres works, we are going to move as rapidly as we can while not putting any patients in danger.

Okay, thanks, Roger.

Ted Tenthoff, Piper Jaffray.

Thanks so much for the update. Congrats on the progress, the start of the 287 study and also the Nestle collaboration. So I had kind of maybe a little different question, but sort of picking up on some of the things we've been discussing here. When it comes to ulcerative colitis and more broadly irritable bowel disease, how consistent are these syndromes?

And I guess the specific point that I'm getting to, you talked about some of the personal differences or intrapatient differences, but how many of the biologically-active components of these drugs treating these different syndromes are consistent? In other words, is there like a fingerprint for a healthy microbiome that we then apply across syndromes and maybe have one or two tweaks here or there depending on what the disorder looks like?

It's a great question and it gets you into how we actually study now that we have metagenomics that have to be fast, accurate and cheap before we could do these scientific studies that led to the trial. To answer this question, I think it's a very important point. When you think of the microbiome, and I've said this to some people, think about it like any organ. It is about function not structure. I'll say it again. It's about function not structure. Whether you deal with a liver or a microbiome or a bone marrow, there are differences in people, but the differences in these organs are subsumed by healthy functions.

So there's different ways to skin the cat, just like in a microbiome. So is there a fingerprint for a healthy microbiome? Remember that microbiomes differ in patients, patients and people around the globe, but let's just take the US. There are clear keystone organisms, there are scaffolding organisms that you see in everyone. There are other differences at the species level, but they always subsume healthy functions.

So just like a bone marrow where I could transplant it into you if we matched immunologically, even though our bone marrow is a different structure, but not in function, you can do the same thing with a microbiome, which is why 109 works in everyone.

So that's really interesting. (multiple speakers)

I've always said that the microbiome gets people a little confused, but if you think of it as an organ, as an [acology] and you think about it with typical medical principles, it still holds there.

Yes, no and I really like that comparison of a bone marrow transplant. That's actually really illustrative in terms of what you are trying to accomplish. Thank you very much.

I appreciate it, Ted.

Mark Breidenbach, H.C. Wainwright.

Thanks for taking the questions. I was wondering since you've been in pretty close contact with the FDA regarding development of SER-109, have you received any indication from them of what a registrational endpoint might look like for the plan (inaudible)?

Absolutely.

Yes, and are you anticipating any real changes from what's being done in the randomized Phase 2 in terms of follow-up time or criteria that are being used to define CDI recurrence?

Yes, obviously, you always look at the data and the cases in a Phase 2 before you lock and load a Phase 3, but we can tell you very clearly that the endpoint will be the endpoint. It's been the endpoint for years; just no one has been able to hit it. You have to be able to have a clinical cure or no recurrence of C diff within eight weeks. Why eight weeks? Because the ID literature and the FDA knows this has shown that if you are going to recur, the vast majority, 98% or so, recur within eight weeks. If you don't recur in eight weeks, you are very unlikely to recur.

That's why it's the endpoint. I expect it, I highly expect it to hold as we move forward and that's what we shoot for in Phase 1b/2, that's what we are shooting in in the 2 and I expect, but I never put words in the FDA's mouth, that that will be the common endpoint for Phase 3.

Okay, perfect. And then touching up on the strategy in ulcerative colitis, I was wondering if you could help us understand if there's a very different patient subset that's going to be targeted with SER-301 versus SER-287?

Yes, so that's a really great question. What you want to do -- we use biological sourcing for high unmet medical need, initial proof of concept and then first-in-class or in this case first-in-field. It's not much different than what you see in small molecules. Then you go, once you learned about the disease and how your first-in-class drug works and helps patients, then in our case you make a synthetic form of it that is based on data that you learned from using the biologically sourced, just like we did with SER-262 when learning from 109.

You make a synthetic product that can be used more globally and at higher quantity, but not necessarily to a different patient population. Can we use the synthetic approach to address different groups within these syndromes? I think the answer to that is yes and that's what's exciting about it.

So it may not be that a one drug fits all. Just like 25% of people with UC don't respond to TNF inhibitors. So if you understand that as a syndrome you have to look at it as a complex disease that you dissect out the actual molecular disease. So that's a long-winded answer, but I think what you will see is just like we did in C Diff. We will use the initial biologic, we will learn from that, we will have the synthetic. That will be what we will use globally. First in field, best in field.

Okay, got it. That is very helpful. One sort of nagging question I had is given that both SER-287 and SER-109 are sourced from donor material, can you help us understand the difference between the formulations of the two? Are you deriving SER-287 from a very different donor population than SER-109?

Yes, so let me talk about that. As you know, we have this really great CMC group led by John Aunins, head of CMC and the vaccine unit at Merck for years, has six vaccines that have been approved that he has helped develop. One of the things that John has been, and his group have been able to do is change a formulation so it can be dosed chronically. We do know that -- we know that dysbiosis is in active UC patients. We also know the microbiome changes that are seen in UC patients in remission that are on maintenance therapy and they are different.

Now the dysbiosis also in UC overlaps, but has some differences from what you see with multiply recurrent C diff. So there's an overlap, but there are some differences. We don't talk exactly what that is because it's proprietary, but what we've found is that in animal models and what we've seen in multiple fecal transplants that using a biologically-sourced approach from similar donors as 109, formulating it so it can be given chronically and given at great -- we think very good COGS not only once a week, but even once a day if necessary is the real change here. How we've made the change in the formulation again is proprietary.

Okay, got it, got it. And not to exclude Eric from the conversation, just a minor --

Please don't.

-- housekeeping question. Eric, can you give us any guidance on how the upfront from Nestle is going to be amortized going forward?

Yes, I hate to punt that question, but because we received the upfront and the deal was closed in the first quarter, it will be a first-quarter 2016 event and we will have more to talk about the accounting treatment in the first-quarter earnings call.

Okay, fair enough. All right, we are looking forward to David Cook's talk at the Translational Microbiome Conference in April and thanks again for taking the questions.

Thank you.

There are no further questions at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.