Seres Therapeutics Inc (MCRB) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Seres Therapeutics Third Quarter 2020 Earnings Conference Call. (Operator Instructions) Please be advised that this call is being recorded. (Operator Instructions)

I would now like to hand the conference over to Dr. Carlo Tanzi, Investor Relations. Thank you. Please go ahead, sir.

Thank you, and good morning. A press release with the company's third quarter 2020 financial results and the 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 relating to the timing, enrollment and results of our clinical studies, regulatory approval, the promise and potential impact of any of our microbiome therapeutics and the sufficiency of our cash and cash equivalents to fund operations. 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, I'm joined by President and Chief Executive Officer, Eric Shaff; Chief Medical Officer, Dr. Lisa von Moltke; and Dr. Matt Henn, Chief Scientific Officer. Dr. Terri Young, Chief Commercial and Strategy Officer, will also available for the Q&A section.

I'll now pass the call to Eric.

Thank you, Carlo, and good morning, everyone. I hope you and your families are staying safe and healthy. Over the past decade, Seres has pioneered the translation of microbiome insights into an entirely new class of medicines. Our microbiome therapeutics are consortia of bacteria in oral capsules designed to produce specific functional changes in the gut microbiome to treat and prevent disease. This has been a landmark year for Seres that has provided what we believe is definitive proof of the clinical utility of our microbiome therapeutic approach and that supports our transition towards becoming a commercial organization.

Based on our recent SER-109 Phase III study success, we believe we are on track to become the first microbiome company to obtain an FDA product approval and bring a drug to market. Our aspiration with SER-109 and with other drug candidates is to transform the management of serious disease through our novel microbiome therapeutic approach.

Our success was highlighted by the positive statistically significant results from our Phase III ECOSPOR III study of SER-109 in patients with recurrent C. difficile infection. Based on the strength of these results and the promise of SER-109 in the marketplace, we were able to fortify our balance sheet with a substantial equity raise, adding approximately $264 million in new capital to the company. Since we obtained our SER-109 study results, the FDA has reaffirmed its prior guidance regarding the efficacy requirements to support a SER-109 BLA submission. The SER-109 ECOSPOR III study results far exceeded the efficacy threshold provided by the FDA. And as a result, we expect this single study to provide the efficacy basis for a SER-109 BLA filing. The FDA also reaffirmed its guidance that at least 300 patients will be required for the SER-109 safety database and to enable a BLA filing. Towards that end, we continue to enroll in our ongoing SER-109 open-label study in patients with recurrent CDI, and we expect this study to fulfill the remainder of our required safety database. We are making substantial progress with the study, activating new clinical sites across the U.S. and Canada and enrolling subjects into the study.

We have initiated several key activities to prepare for an anticipated SER-109 product launch. We have conducted market assessment work, primary research with physicians and payers, pricing and reimbursement analysis and product naming work. We plan to scale our market education efforts in 2021 with significant HCP and payer education efforts, including the deployment of an MSL team.

With regard to SER-109 manufacturing, while we are already at commercial scale, we are expanding our capabilities in preparation for product launch and potential rapid uptake into the market. We recently hired Dave Ege as our new Chief Technology Officer. Dave joined Seres from Merck and has experienced successfully leading the manufacturing of important pharmaceuticals, including KEYTRUDA, will be vital for the company as we look ahead to the expected commercialization of SER-109. Dave succeeds John Aunins who led Seres manufacturing efforts since the company was formed. We are very pleased that John will continue to support the company in the senior adviser capacity.

With that, I'll now turn the call over to Lisa.

Thanks, Eric, and good morning, everyone. I'll begin with a recap of our SER-109 Phase III data that we announced in August. The top line results demonstrated that SER-109 met the study's primary 8-week endpoint with SER-109 showing a remarkable 30.2% absolute reduction of recurrence of CDI compared to placebo at 8 weeks post treatment. We were also extremely pleased to see that the results demonstrated a highly favorable safety profile with SER-109 adverse events looking similar to placebo.

In late October, we presented a top line Phase III results as well as some additional clinical study data at the American College of Gastroenterology Annual Scientific Meeting. New data showed that at 12 weeks post administration, the rate of recurrence in the SER-109 arm was consistent with the results seen at 8 weeks, which was the study's primary endpoint. Additionally, we presented data demonstrating that SER-109 administration resulted in similar efficacy when stratified by age or by the prior antibiotic received. We have heard substantial physician interest regarding SER-109, and many have highlighted the enormous medical and financial burdens of this disease, and they have expressed enthusiasm that SER-109 could represent a major advance for this field.

Now moving to our SER-287 program, which is an ongoing Phase IIb study in patients with mild to moderate clinically active ulcerative colitis. SER-287 is an orally administered, biologically derived drug candidate comprised of commensal bacterial spores isolated from the healthy human gastrointestinal tract. Our objective with SER-287 is to develop a first-in-class microbiome therapeutic that modulates the microbiome and microbiome-associated metabolites to treat ulcerative colitis. We believe that SER-287 may provide a much needed nonimmunosuppressive treatment option for UC. SER-287 is intended to reduce the impact of a dysfunctional microbiome as both a trigger and an amplifier of inflammation. We believe that SER-287 has the potential to be used as both a monotherapy and potentially also in combination with other approved agents.

To remind you, the 287 Phase IIb ECO-RESET study is a randomized, placebo-controlled, 3-arm induction trial that was designed to enroll 201 patients with active, mild to moderate ulcerative colitis who have failed prior therapy. In Arm A, patients receive a short course of vancomycin preconditioning followed by 10 weeks of the same daily regimen that was used in the arm of the previous Ib study that showed the highest clinical remission rate. In Arm B, patients receive vancomycin preconditioning followed by 2 weeks of the same SER-287 daily regimen used in Arm A, followed by 8 weeks of a lower dose. In Arm C, patients receive placebo.

As we previously reported, the COVID-19 pandemic has had an impact on our currently enrolling clinical studies, including the SER-287 Phase IIb trial. This study is now over 75% enrolled based on the study's 201 patient target. Our clinical team has implemented a number of mitigation strategies aimed at maintaining forward progress, including providing increased clinical support to trial sites and additional flexibility regarding data capture.

Now moving to our Phase Ib study for SER-401 in our oncology portfolio. SER-401 is an orally administered, biologically derived microbiome therapeutic candidate, comprising bacteria reflective of the microbiome signature associated with response to checkpoint inhibitor immunotherapy. With SER-01 (sic) [SER-401], we are targeting an increase in efficacy of checkpoint inhibitor immunotherapy and improvement in patient outcomes. In collaboration with the Parker Institute for Cancer Immunotherapy and MD Anderson Cancer Center, we continue to enroll a randomized, placebo-controlled Phase Ib study of SER-401 in patients with metastatic melanoma. All patients received nivolumab, an FDA-approved anti-PD-1 therapy, and are randomized at a 2:1 ratio to either SER-401 or placebo. The trial is evaluating the safety, tolerability and drug activity measured as the engraftment of SER-401 bacteria in the GI tract and its association with biomarkers of clinical response and outcome.

With that, I'll now pass the call to Matt.

Thank you, Lisa, and good morning, everyone. We are very pleased to announce the dosing of the first patient in our SER-301 Phase Ib study. SER-301 is a next-generation, orally dosed, rationally designed, fermented microbiome therapeutic candidate for the treatment of ulcerative colitis. The consortia of bacteria in SER-301 is designed to modify the microbiome and microbe-associated metabolites in the gastrointestinal tract to modulate pathways linked to gastrointestinal inflammation and epithelial barrier integrity in patients with ulcerative colitis.

SER-301 was designed using serious reverse translation discovery platform that incorporates analysis of microbiome biomarkers from human clinical data and preclinical assessments of microbial strains and consortia using human cell-based assays and in vitro and in vivo disease models. The design was incorporate -- has incorporated learnings from the SER-287 Phase Ib study related to the bacterial species and the microbiome functional signatures associated with clinical efficacy in that study. SER-301 is being evaluated in a Phase Ib study in adults with mild to moderate ulcerative colitis.

The study is being conducted in Australia and New Zealand and includes 2 cohorts, comprising approximately 65 patients in total. A first open-label cohort of 15 subjects will evaluate safety and pharmacokinetics as measured by bacterial engraftment. In the subsequent second cohort, 50 subjects will be randomized to receive either SER-301 or placebo. The objectives for this cohort are to evaluate drug safety and TK and evaluate clinical remission and other measures of efficacy as secondary endpoints.

Moving now to SER-155. SER-155 is an orally dosed, rationally designed, fermented microbiome therapeutic candidate that we have advanced into clinical development. SER-155 built on our expertise in infectious disease and immunology. It is designed to prevent mortality due to gastrointestinal bacterial infections and bacteremia and graft-versus-host disease in immunocompromised patients, including in patients receiving allogeneic hematopoietic stem cell transplantation. We expect that the SER-155 clinical program will provide insights into the potential for the microbiome therapeutics to improve outcomes in stem cell transplant patients and to advance our novel technology to prevent and treat antibiotic-resistant bacterial infections and bacterial sepsis more broadly. The SER-155 program is supported by a CARB-X grant that provides financial and operational support. We expect to advance the program into a Phase Ib study early in 2021 in collaboration with Memorial Sloan Kettering Cancer Center.

Both our SER-301 and SER-155 programs represent important advances in Seres technology, capabilities and drug pipeline. Through these programs, Seres has continued to refine our knowledge from the underlying mechanisms by which microbes in the gastrointestinal track engage pathogenic bacteria and human cells and tissues to impact disease. Further, through these programs, we have continued to advance our field-leading GMP manufacturing capabilities and the breadth of biological diversity that can be incorporated into our drugs with technologies that can deliver bacteria in both spore and lyophilize vegetative cell formulations.

I'll now turn the call back to Eric.

Thanks, Matt. Turning now to an overview of our recent financials. Seres reported a net loss of $30.3 million for the third quarter of 2020 as compared to a net loss of $16.4 million for the same period in 2019. The third quarter net loss was driven primarily by clinical and development expenses, personnel expenses and ongoing development of the company's microbiome therapeutics platform. Additional financial information regarding the quarter can be found in our press release as well as our 10-Q that we intend to file later today.

Seres ended the third quarter in a strong financial position with approximately $320 million in cash, cash equivalents and investments compared with $63.9 million at the end of the second quarter of 2020. In August 2020, the company completed a public equity offering and a securities purchase agreement with Nestlé that, in total, provided approximately $264 million in net proceeds. We also anticipate receipt of a $10 million SER-301 Phase I-associated milestone payment that Seres is entitled to as part of our Nestlé collaboration. We will use our strength in corporate resources to execute against our top objectives.

Our company priorities are: to prepare for SER-109 commercialization, including augmenting our existing CMC infrastructure; to advance our development-stage assets to meaningful clinical milestones; and to deepen our R&D capabilities and expand our pipeline into new disease areas where we believe the microbiome therapeutics could be effective. Seres has long been leading the emerging field of microbiome therapeutics. We intend to utilize the resources now available for the company to recruit additional world-class talent and further extend our therapeutic category leadership position.

Before opening up the call to your questions, I'd like to reiterate how excited we are by what lies ahead for Seres and the microbiome space in general. Our highest priority is completing the work needed for our SER-109 BLA and preparing for the potential launch of the first-ever microbiome therapy. Our success in 2020 is the culmination of a decade of work with many contributors. I want to thank our talented and dedicated team who never lost sight of the goal of pioneering this new field of medicine and creating important new treatment options for patients in need. This is an exciting time for Seres, and we look forward to advancing this new therapeutic category and working tirelessly to help patients in the years ahead.

With that, operator, we'll open up the call now to questions.

(Operator Instructions) Our first question comes from the line of Ted Tenthoff with Piper Sandler.

Congrats on all the progress. It's really exciting. I want to get a sense for maybe where you are in enrollment with the additional safety cohort and when -- if you have any guidance on when maybe enrollment for that could be completed.

Ted, thanks for the question. Let me start and then maybe I'll ask Lisa just to provide some color. So as a reminder, we started the open-label fairly recently. I will say that I'm extremely pleased that we did make a number of at-risk investments prior to the Phase III results that came in August to ensure that we were ready to move forward with the open label. But certainly, we're continuing to make progress. We're continuing to open sites, and maybe I can ask Lisa to provide some additional color.

Sure. So yes, as Eric said, we were making a lot of progress with site activation. We're getting a lot of enthusiasm, both because of the 012 results, the fact that there's no placebo, the fact that this trial allows for inclusion of first recurrent patients and the fact that FMT is currently constrained. But we are also mindful that the COVID landscape may be changing, and we're going to be very vigilant in looking for any new headwinds that this might cause us. But right now, we're making very good progress.

So obviously -- sorry, just to finish. Obviously, a key operational priority for us, and we're working extremely hard to move ourselves forward.

And our next question comes from the line of Joseph Thome with Cowen and Company.

Congrats on the progress. The first one is on 109. As you did indicate that the open-label study does include patients that have first recurrence, what's sort of your best guess of where in the treatment paradigm 109 will fit once it's successfully launched in practice? And then one more, if I can. Just on 287 and 301, how do you anticipate advancing both of those programs? If they show solid data for both, would you be taking both forward? Or is there a time where you would look at the data and see if you want to take one candidate forward versus the other?

Yes, Joe, thanks for the 2 questions. Why don't we start with 109. And I think you're asking maybe about the label but also the opportunity, and I think it's important to comment on both. Of course, the label will be determined as part of the end of a negotiation with the FDA as part of the BLA process. Certainly, we believe that SER-109 should be applicable for a broad set of patients, including first occurrence and greater. We've got data that encourages us, including, as Lisa mentioned, we have asked the FDA to allow first recurrent patients into our open-label study to which they agreed. So that's a data point that we think is helpful. But maybe I can ask Lisa to comment just on the medical perspective as it relates to first versus multiply recurrent, and then we can hit your 287 question.

Yes. So the medical underpinnings for first recurrence and further recurrence are essentially the same in that once patients recur, it's indicative of the fact that they have a dysfunctional microbiome that needs repair. So our KOLs as well as we internally see that medically the indication would be completely appropriate. But as Eric stated, the label itself will be a discussion with FDA.

And Joe, maybe I can move to your second question, which relates to 301 and 287. And look, I'd say, as a team, we are incredibly excited about dosing the first patient with 301. And we think it's a significant technological achievement for the company that we're really proud of. Maybe I'll ask Matt to comment just on the learnings from the 287 to 301. But I think this is illustrative of really our first-in-class and best-in-class strategy, right? So as we leverage human data sets, and it's hugely important to recognize that human data sets are so important in understanding the microbiome of a human, 301 really is really that next step forward. And of course, as you know, we're conducting the Ib study in Australia and New Zealand. We think that there's rationale for geographically separating the 2 studies. They're not going to cannibalize each other. But we really do think that there's an opportunity to help patients with both a biologically sourced as well as a defined approach.

Advantages for each, right? On the 301 side, obviously, there's a supply chain element, which is more efficient. But at the same time, with our 287 Ib data set, we really had a lot of encouragement that this could be a program that can help patients in need. I think that there's a misunderstanding about how effective existing therapies are in terms of successfully achieving remission for patients in the space.

But maybe I can ask Matt just to comment further on the leverage between our 287 and 301 programs that really were accrued and applied in the design of 301 and gives us a lot of optimism moving forward.

Yes. Sure. So the SER-287 trial, as Eric indicated, give us direct insights into species and strains that engraft and are associated with clinical remission as well as microbe-associated metabolites that are as well associated with clinical remission. And these data on these metabolites, these pathways, these particular species really helped guide the design of SER-301. And I think the real power the 301 comes from, combining those types of insights with our work in a nonclinical setting using various different human cell-based assays, where we can then as well look and understand at a fine level of detail how the microbes themselves and then metabolizes they're generating impact, various different disease-relevant pathways. And it's by combining these various different pieces of information using what is really a research engine that Seres built up to do specifically this, we've been able to pull together the design of SER-301 and the selection of strains that are in. And I think really, the strength comes from leveraging both those human insights because we have found across our clinical portfolio that the insights you get from human subjects are instrumental in designing our drugs.

Our next question comes from the line of John Newman with Canaccord.

Congrats on the progress. The first question I had was, wondering if you could give us some sense as to when we might see some initial data on SER-287, I know that, that study is still enrolling, and whether you might update us when it completes enrolling. Second question I had is regarding SER-401. Just curious, if you see things that are interesting in that Phase I study in melanoma, how quickly could you move into a larger study? And the reason I'm asking is because the design of that study is very interesting. It's actually -- it's a Phase I, but it's got a control arm, which we normally don't see. So I'm just curious as to if you do see something interesting there, how quickly you might move ahead with a larger study.

Yes, John, thank you for the questions. Let me start with the first, on 287. I might ask Lisa to comment, and then we can ask Matt to comment on 401. So for 287, of course, we have been impacted by the pandemic as others that are conducting studies in this space. Of course, we require endoscopy as part of our clinical protocol. So particularly into the spring and in the early part of the summer, we were pretty constrained. We have said, and I'll reiterate today, we've seen progress in terms of enrollment, and we continue to screen and enroll. And there have been signs for encouragement, both throughout the summer and into the fall. We are not today at the point of enrollment that we were at the beginning of the year. So we have implemented a number of mitigation strategies related to the pandemic, which give us encouragement in the ability to enroll going forward.

Obviously, our crystal ball is no better than anybody else's as it relates to where the pandemic goes next. Obviously, we're highly, highly encouraged with the vaccine data that came out this morning. But we are excited about the opportunity to continue enrolling patients and moving forward with the study.

Lisa, anything that you want to comment on that before we hit 401?

Yes. No, I think that, as you said, we've -- we and others have made a lot of adjustments in the clinical trial space to compensate for the various COVID influences. But obviously, if COVID does take off again, even if sites stay open, there's always the question about whether patients will reengage with the medical system for anything. So we're going to keep an eye on it, but we're liking our -- the change that we've seen since the spring.

And then, John, to your second question, maybe I can ask Matt to comment on 401. It's probably important just to maybe ground everybody in the objectives of the study. So let me turn it to Matt for a couple of comments.

Yes. Sure, Eric. So as Lisa noted earlier in the call, this trial is evaluating the safety, tolerability and drug activity of SER-401 in metastatic melanoma patients where there -- it's combination therapy with nivolumab plus SER-401. And John, as you pointed out, this is a placebo-controlled trial. And we designed the trial as such because we have certainly learned through our clinical development experience the extreme value that comes from these placebo-controlled trials, even if they are smaller in size and exploratory. And we've gained very important insights that -- from running such trials.

So our goal with this trial is to really understand how SER-401, what activity is in subjects. So we'll look at engraftment as we typically do in our studies but then also look to understand what types of biomarkers might be associated with engraftment or broader changes in the microbiome as it was of that engraftment of SER-401.

In terms of -- this is an exploratory Phase Ib trial. And pending results from this and the learnings from this, we'll do as we always have done at Seres is to take a hard look at the data and then make decisions about what's the best path forward is with respect to the next trial and the drug modality.

Our next question comes from the line of Mark Breidenbach with Oppenheimer.

Congrats on the really transformational quarter. Maybe I can ask one question about SER-109 and one about SER-287. First, can we expect to see 24-week data from ECOSPOR III sometime in early 2021? And I'm also wondering how much patient follow-up the FDA is asking for in the ECOSPOR IV study to satisfy the safety database requirement for SER-109.

Yes. So Mark, thanks for the question. I'll ask Lisa to comment. I will say that we are continuing to work with the FDA to clarify the schedule of how we will present data to them as part of the open-label study. And maybe Lisa can comment further on that as well as the plan for additional data disclosure from the study.

Sure. So with regard to the 013 study, recall that we had already gotten to 105 safety patients, if you will, with the end of the 012. So with regard to the remainder of that 300. as Eric said, we've been discussing with FDA exactly what the schedule for providing that. And also, as Eric had noted, we didn't waste any time while we were waiting for those discussions to go ahead and get started. Now the 012 study, the final 24-week data is going to be available internally very, very soon. I mean you can just do the math based on when we finished up with our 12-week announcement this summer. So we will be looking for the correct venues to get information to you all as well as to the medical community. And obviously, we'd like to be able to preserve the ability to disseminate that through publications and things like that. So we'll be working hard to identify those venues.

Okay. Got it. And just with respect to SER-287, I know you've previously mentioned ECO-RESET could serve as 1 of 2 pivotal trials that could support registration in ulcerative colitis. Maybe it'd be helpful if you could give us a sense for how a potential second study would differ from ECO-RESET in terms of size and endpoints.

(Operator Instructions) Our next question comes from the line of Chris Howerton with Jefferies.

I'm not sure if you wanted to try and answer the previous question with respect to the ECO-RESET trial. I'm fine waiting a moment. So Eric...

(technical difficulty)

Bear with us, guys. It looks like we're having some technical difficulties from the sounds of things. If folks could just hold tight for one second.

Lisa, maybe you can take Mark's question on the Phase III.

Yes. I think 287 results will be incredibly important for designing the next study. So I think in terms of size, a lot will depend on the effect size we see and whether or not we need to think about a bigger trial or a similar trial to make sure that we are statistically significant. So really, without seeing the results of 287, it's really hard to speculate on what the next trial would look like.

Are you -- were you able to -- is that okay? Hello?

So this is Chris Howerton. I don't know. I heard you just fine, Lisa. I don't know if you guys can hear me.

I can hear you.

We can hear you, Chris, yes. There's definitely some technical issues going on, but we can hear you.

Okay. Awesome. All right. Well, very good. The -- well, maybe I'll just add a couple of questions then, and then we'll see it happen. So the -- for the first one, maybe, Lisa, just to clarify what you had said previously for the 012 study, which I think was the ECOSPOR III study. You had 105 patients that comprise the safety database. I just wanted to confirm that I heard that number right.

The second question that I had was what are the specific plans for CMC expansion? I think, obviously, I've seen the facility in the Boston, very beautiful there. So what would be the plans in terms of expanding to a different facility to augment that? And what are the kind of capabilities that you would like to see augmented internally to either support biologically sourced or rationally designed consortia, obviously, as those are entering the clinic more and more?

Yes. So for...

I'm back on, sorry. Sorry, I lost you there. Lisa can comment on the first. The 105, Chris, just to be clear, was at the time that we announced the top line results. But Lisa, why don't you comment on the first and then we can talk about the second?

Yes. Well, that's exactly it. So it was those that had been in 012 as well as in the extension so -- had already been in the start of the 013 study. That's exactly right.

Yes. And then, Chris, and hopefully, my phone line hangs on here. As it relates to CMC, so look, let's take a step back here. We are -- not only are we thrilled with the Phase III results for SER-109, we're now moving to a phase where we feel we have a significant responsibility to serve this patient group that really hasn't seen innovation in the space in quite some time, and we really do think we have the opportunity to help these patients. So we want to be sure that we are serving these patients with the right capacity and at some point, redundancy to ensure that there isn't an interruption in the availability of drug.

We are currently at commercial scale. But with these Phase III results, and you mentioned it, not only on the biological side of the house but also as evidenced by our dosing our first patient on 301, we think there's opportunities as the pipeline and the platform progresses to serve patients both in the biologically sourced side of the house as well as the synthetic, too. So we will be looking to make investments. And I think bringing Dave onboard is perhaps illustrative of the fact that we take very seriously the -- not only the supply chain but also the manufacturing processes to ensure that we're providing drive for patients as we move forward, both for the later-stage side of the pipeline as well as the earlier-stage side of the pipeline.

And I'm not showing any further questions. I'll now turn the call back over to management for closing remarks.

So again, thanks for your attention this morning. We hope that you have a great week, and we look forward to connecting with you soon. Be healthy and well. Thanks, and good morning.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Thank you for participating, and have a wonderful day.