Seres Therapeutics, Inc.

Thank you for holding, and welcome everyone to the Series Therapeutics 4th Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, again, press star 1. Thank you. I will now turn the call over to Dr. Carlo Tanzi of Investor Relations. Dr. Carlo Tanzi, please go ahead.

Thank you and good morning. Our press release for the company's fourth quarter 2022 financial results and a business update became available at 7 a.m. Eastern time this morning. It can be found on the investors and news section of the company's website. I'd like to remind you that we'll be making forward-looking statements, including the potential approval and launch of investigational microbiome therapeutic CR109 and its status as a first-in-class oral therapeutic. The anticipated indication for SEER-109, the availability of product supply, the potential for microbiome therapeutics to protect against infection, the use of cash to fund operations, and other statements which are not historical fact. Actual results may differ materially. Additionally, these statements are subject to certain risks and uncertainties which are discussed under the risk factors section of our recent SEC filings. Any forward-looking statements made on today's call represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so. On today's call, with prepared remarks, I'm joined by Eric Schaaf, SEER's President and CEO, David Arkowitz, Chief Financial Officer, Dr. Lisa Von Mulkey, Chief Medical Officer, and Dr. Terry Young, Chief Commercial and Strategy Officer. During the Q&A section, Dr. Dave Ege, Chief Technology Officer, and Dr. Matthew Mann, Chief Scientific Officer, will also be available to answer questions. With that, I'll pass the call to Eric.

Thank you, Carlo, and good morning, everyone. CIRES continues to make excellent progress advancing our microbiome therapeutics pipeline. I'll begin with CIR-109. We are highly focused on securing FDA approval for CIR-109, our lead microbiome therapeutic candidate for recurrent C. difficile infection and the FDA's PDUFA action date for this program is April 26th. As we approach the FDA's expected decision, we are also continuing our work to execute a successful commercial launch pending approval. With SIR109, we believe we may have an opportunity to transform the management of recurrent C. difficile infection and provide a meaningful new therapeutic option for patients. Our optimism is supported by compelling data from our Phase III studies. This includes data showing high levels of durable efficacy and a well-tolerated safety profile. This clinical profile is accompanied by a patient-friendly oral route of administration. Furthermore, we believe that our proprietary pathogen inactivation process may provide SIR-109 with important safety advantages. In addition to the impact that SIR-109 may have for recurrent CDI, the approval of this investigational therapeutic would also be significant, as this could be the first-ever oral microbiome therapeutic approved by the FDA. SIR-109 could represent the beginning of a broader application of microbiome-based approaches across multiple medical conditions, and we believe that CIRES is well-positioned to continue to lead this pioneering effort. As we approach the FDA PDUFA decision date of April 26th, our interactions with the agency continue to be highly active and, we believe, constructive. We remain on track with the priority review process and we are optimistic about the pending approval decision. Our organization and our collaborator, Nestle Health Science, continue to make excellent progress preparing for the Sierra 109 commercial launch pending a favorable approval decision. We expect to be prepared to commercially launch in the weeks following an approval. In a few minutes, Terry will provide more detail on commercial readiness activities. As we prepare for a potential SIR 109 launch, we have also continued to build our SIR 109 drug supply while enhancing future supply capacity. Our goal has been to create supply to meet SIR 109 market demand in all anticipated uptake scenarios, and we believe we are on track to achieve this goal. In addition, we are focused on ensuring that we have sufficient supply in the years post-launch. In late 2021, we entered into a collaboration with Baxera designed to augment our drug supply capabilities as well as to provide another layer of redundancy. I'm pleased to report that our plan in working with Baxera is proceeding well. and on track. Our CMC teams are working together in an integrated manner, and we anticipate that Baxero will be ready to begin to produce commercial drug product in 2024 for release in 2025 as the expected number of patients treated with SIR 109 expands. I'll now pass the call over to Lisa.

Thanks, Eric. We are now within two months of SIR 109's PDUFA date. And as you might expect, this is a busy period for the organization as we approach potential approval decision. During the last several months, we have also continued to publish SEER 109 clinical data. And alongside our collaborator, Nestle Health Science, we have continued to make excellent progress advancing appropriate educational efforts with physicians. I'd like to highlight several recent SEER 109 publications that we believe further illustrate the efficacy and safety profile observed in clinical trials. We believe that SEER-109 is differentiated not only by the magnitude of the efficacy observed, but also by the duration of activity. In October, additional data from the Phase III ECOSPOR-3 study were published in the Journal of the American Medical Association. And we presented these results at the ID Week and American College of Gastroenterology 2022 annual meetings. These data showed that prevention of recurrent CDI was apparent as early as two weeks post-administration, and that SEER-109 activity was durable, with recurrence rates continuing to be markedly different from placebo at 24 weeks. We believe that the efficacy results observed, including the durability data, are clearly differentiated compared to other reported study results and highlight the substantial clinical benefit that SEER-109 could provide if approved. Last month, we announced the publication of two noteworthy SEER-109 papers in JAMA Network Open. One summarized the results of the SEER-109 Phase 3 ECOSPOR-4 study. ECOSPOR-4 was designed to provide additional safety information in adults with recurrent CDI who were treated with standard of care antibiotics and then SEER-109. This was a 24-week study that included 263 enrolled subjects with a history of recurrent CDI. including individuals that had experienced only a single recurrence of CDI. Overall, the safety profile through 24 weeks of follow-up indicated that SIR-109 was well tolerated. This was consistent with the safety profile observed in the placebo-controlled ECOSPOR-3 study. We also evaluated CDI recurrence rates in ECOSPOR-4. At the eight-week endpoint, 91.3% of patients remained free of recurrence, supporting positive data from the SEER-109 placebo-controlled ECOSPOR-3 study. Our data also showed that the response was durable out to the final 24-week endpoint. Importantly, similar results were observed in all subgroups, including those with a single recurrence of CDI. we believe the ECOSPOR-4 data provide additional evidence indicating that SEER-109 may provide clinical benefit to a broad population of recurrent CDI patients. Earlier this year, we also published another notable manuscript in JAMA Network Open based on secondary data from the ECOSPOR-3 Phase III study, which showed that SEER-109 administration was associated with a rapid and steady improvement in health-related quality of life, an important patient-reported outcome as compared to placebo. Now moving to SEER-155, which is being developed to reduce the risk of infection, including antimicrobial-resistant infections and graft-versus-host disease in individuals receiving allogeneic stem cell transplant. Protecting vulnerable individuals from infection is an area of particular interest to CERES, and we believe that microbiome therapeutics may provide a novel approach to addressing infection with potential widespread clinical utility in medically compromised populations. The ongoing CER155 Phase 1b study is being conducted in individuals undergoing treatment for hematologic malignancies, such as leukemia. The study is designed to evaluate safety and drug pharmacology, including the engraftment of SIR-155 in patients' gastrointestinal tracts. In addition, data are being collected on the reduction in abundance of bacterial pathogens in the GI tract and to evaluate clinical outcomes, including rates of bloodstream infections and acute GVHD. The SIR-155 Phase 1b study includes two cohorts. Cohort 1 included 13 subjects that received SEER 155 and was designed to assess safety and drug pharmacology, including assessing engraftment of drug bacteria in the GI tract. Earlier this year, we reported that the study's Data and Safety Monitoring Board had reviewed available Cohort 1 clinical data in a pre-planned analysis and had cleared advancement to the second study cohort. We are now enrolling subjects in Cohort 2. In parallel, we continue to analyze the pharmacology data from Cohort 1, and we expect to report preliminary safety and pharmacology data in May 2023. With these pending data, we hope to observe clear evidence that CR155 bacteria have successfully engrafted, and that these bacteria are resulting in the intended pharmacological effects. We look forward to continuing to provide updates as we execute this important study.

And with that, I will now pass the call to Teri. Thanks, Lisa. The commercial organization is energized and excited about the upcoming potential approval of SEER 109. We have been working closely with our collaborators at Nestle Health Science as an integrated team and are now nearing full launch readiness. We believe the SEER 109 market opportunity is substantial In fact, we estimate that there will be approximately 156,000 cases of recurrent CDI in the U.S. this year alone. This disease is significantly debilitating and isolating for patients, with mortality rates estimated at over 20,000 deaths per year. Current treatment options are suboptimal, and healthcare practitioners and patients are eager for better solutions that could provide high levels of efficacy and a well-tolerated oral formulation. CR109 represents a product profile that uniquely meets patient and prescriber needs for prevention of recurrent CDI. If approved, we believe that CR109 has the potential to transform how recurrent CDI is managed, resulting in far better patient outcomes, as well as greatly reducing the burden that this disease is placing on our healthcare system. Our preparations for the potential CR109 commercial launch are proceeding according to plan. I'll also remind you that last December, we held a webcast investor event where we discussed our launch plans in some detail and the substantial commercial opportunity in recurrent CDI. The Ceres and Nestle teams have been executing on a number of pre-commercialization activities, including the market education that Lisa discussed, continuing engagement with payers, and expansion of Nestle's existing field sales infrastructure. Specifically, Nestle recently hired a hospital selling team of 20 to profile the top volume hospitals across the country during the remainder of our prelaunch phase. Post-approval, this team will also cover the infectious disease specialty, and we will deploy the existing 150-person gastroenterology sales force at Nestle. Finally, the Nestle payer field team continues their pre-approval information exchange efforts with payers and have already engaged with payers covering more than 150 million lives. The feedback we have received so far is encouraging. Overall, I am pleased with the status of both companies' launch preparations, and we stand ready to execute immediately if we receive a favorable FDA decision. With that, I'll now turn the call to David to provide an overview of our financials.

Thanks, Terry. The details of our fourth quarter and full-year financials are included in the press release issued this morning, so I won't reiterate all the figures here. SEERs ended the fourth quarter of 2022 with approximately $181 million in cash, cash equivalents, and marketable securities. Regarding our efforts and resources over the near term, we continue to be focused on a number of critical SEER 109-related activities. which include continuing to ramp up manufacturing operations for commercial supply internally and with our partner, Resafarm, including building up SEER 109 commercial inventory, as well as expanding longer-term SEER 109 product supply capacity through our BACTERA collaboration, and in conjunction with Nestle, continuing and accelerating launch readiness activities. We also continue to invest to advance and expand our pipeline with a focus on infection protection opportunities and further build upon and enhance our platforms and capabilities. As we have already expanded our capabilities across much of our organization, we expect our expenses leading up to the SEER-109 approval and launch to grow modestly. In summary, the company continues to be well resourced to execute effective SEER-109 commercialization activities pending FDA approval and to drive our ongoing development and preclinical programs. We will also continue to efficiently deploy resources to advance our research platforms. I'll now turn the call back to Eric.

Thank you, David. This is an exciting period for CERES as we near the potential approval of CR109, which would be a tremendous milestone for the company and for the entire field. We approach the PDUFA date confident in the data provided to the FDA, and well prepared to effectively execute a product launch pending approval. In addition to SIR-109 and SIR-155, we are also advancing additional promising earlier stage microbiome therapeutic candidates. With these programs, we believe that there are significant opportunities to help additional multiple medically compromised patient groups, such as those with cancer neutropenia, cirrhosis, and solid organ transplant patients. Over the course of the year, we look forward to providing you with progress updates on CR109, CR155, as well as our additional microbiome therapeutic programs. With that, I will conclude our prepared remarks and open the call up to questions.

Certainly. At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. Mark Breitenbach with Oppenheimer, your line is open.

Hey, good morning, guys. Thanks for taking the questions and congrats on recent progress. Just a couple of quick ones from me. First of all, can you comment on the current stockpile of SIR 109 you have available immediately upon potential approval and launch? And maybe just also comment on the in-house manufacturing capacity versus what additional capacity back there could add on top of what you guys can already make. And then the second question is really just maybe aimed at David. I'm wondering, in addition to the $125 million milestone that would come with potential approval in April, if you're expecting any additional development or commercial milestones from Nestle in 2023 that we should be keeping our eyes out for. Thanks for taking the questions.

Yeah, Mark, good morning, and thank you for the questions. Let me start with the first one, and we've got Dave Eggie on the line. I'll ask him to provide his perspective, too. So in terms of stockpiling of inventory or maybe preparing for launch, You know, what we have said is that we've been working on this process for some time. We're pleased to be taking our phase three process to launch. And we have been preparing for a number of different launch scenarios. So we're really pleased with where we are. And we expect to be well prepared for the approval and then for launch thereafter. In terms of the divide of in-house versus what we do with CDMOs, maybe I can ask Dave to comment further on that.

Sure. Thank you, Eric. And, Mark, thanks for the question. Yeah, so as it relates to the in-house and the bacteria, so it's been our strategy for quite some time that, as Eric mentioned just a moment ago, we're bringing our Phase III process forward to launch. It's adequate in scale. and volume to meet the near-term forecast that we have together with Nestle. And by design, back there, as was mentioned earlier in the call, we'll start producing material ahead of the facility approval in 2024. And we anticipate an approval for that material to reach the market in 2025. So, that's augmenting capacity. as a market gross, as well as providing redundancy with what we had internally and with ResaFarm currently.

And we're really pleased with where we are with ResaFarm and our relationship and the work that we've done with them. Mark, maybe on your second question, I can ask David to comment.

Yeah, thanks, Mark. So, as you indicated and as we have talked about, we are eligible for a $125 million milestone from Nestle upon SEER 109 approval. The other cash flow that we expect relates to SEER 1 or 9 commercial supply that we have been producing leading up to approval and thereafter. And we have been doing that at our cost. We will sell that inventory to Nestle at or around approval. And then thereafter, there'll be kind of a, think about it as a steady cadence of purchases by Nestle from a supply standpoint. So that will provide an initial bolus of cash coming in and then a steady supply thereafter.

All right, that's helpful.

Thanks for taking the questions, and congrats again.

Thanks again, Mark.

John Newman with Canaccord, your line is open.

Hello, thanks for taking my question. I just wondered if you could talk to us a little bit more about the initial launch targeting for SEER-109 and know that you've got a really interesting focus on the outpatient setting. And I'm just curious if you could talk just a little bit more about the types of physicians that you'll be targeting initially. Thanks.

Yeah, John, let me start and then I'll ask Terry to comment. But I would say that for some time we've been doing quite a bit of research and interaction with healthcare providers. Terry and I, with our partners at Nestle, have spent quite a bit of time recently with a number of different folks, and I can tell you there's a lot of excitement around the potential of SIR-109. I think the idea of having a new tool to help patients in this space when it's been so long without something that is effective, that is something that has a favorable safety profile, something that is effective, in particular oral and scalable, we can kind of hear the hunger in the voices of those treating physicians for something new. But maybe, Tara, you can comment further on that.

Sure. Good morning, John. With the gastroenterology sales force that Nestle is currently deploying with one of their in-line products, we'll be leveraging that sales team to reach their existing gastroenterology targets where they already have deep, longstanding relationships. At launch, we'll be deploying that sales team. And we'll also be, via that sales force, reaching a small number of other physician extenders in those offices, NPs and PAs, for example, and other high-volume physicians. So that's the gastroenterology outpatient sales force. I also mentioned that we recently stood up a hospital selling team that will be profiling and then ultimately selling to the largest institutions across the country that see the highest patient volume of recurrent CDI patients. That team will in addition call on infectious disease physicians because as we know, most of those ID physicians spend the vast majority of their time within the walls of the hospital. Now as a reminder, we're targeting the hospitals not to target the inpatient business, but as you so rightly pointed out, rather the, what I call the hospital to home segment. Patients who may begin antibiotic therapy in the hospital who are then discharged to complete their antibiotic regimen and then would also take CR109 on the back of the completion of that regimen, therefore in the outpatient setting. So that gives you a flavor of the type of physicians that we'll be calling on post-approval, and we are finalizing our call plans currently as we approach the PDUFA date with our colleagues at Nestle Health Science. I hope that helps. Thanks, John.

Yes, thank you. Thanks for the question, John.

Ted Tentoff with Piper Sandler. Your line is open.

Great. Thank you very much. I'm excited for the PDUFA date as well. I guess my question is, without an outcome, And I'm not sure that you're at this point yet. But when it comes to label discussions, how can the conversation go around first recurrence, second recurrence? How important do you ultimately think that's going to be to the launch and the initial success of 109? Thanks.

Yeah, Ted, thanks for the question and good morning. I might ask both Terry and Lisa to comment. I will always preface our comments with, you know, we don't speak for the FDA and nor do we speak to the label discussion. We have said, continue to believe that the right approach here is a recurrent label, right? And as we've said beforehand, physicians tend to look at this field in two different categories. One is a primary occurrence, and the second is a recurrence. And when someone has a recurrence, their microbiome has been injured to the point where they're susceptible to future recurrences. But maybe I can ask Lisa on the regulatory side or the label side to comment on importance, and then Terry can speak from the commercial side too.

No, so as Eric said, you know, we have based our research desire to have the broad label on the fact that clinicians see this as a homogeneous disease once you get into the recurrent population. But it's also based on the FDA's own guidance. If you look at the FDA's labeling guidance, they go into quite a bit of extensive detail on on situations where pathophysiology is the same and risk-benefit can be also then assumed to be the same as a reason for why they would deviate, if you will, from the exact details of how something was run in a trial. There was also a JAMA paper last spring actually reviewing the number of times that FDA does do that, and it's fairly common. So we feel very confident, given the fact that the community, the medical community, already views this as a similar situation, whether you're in first recurrence, second recurrence, whatever. We know that's what the pathophysiology is, and the agency has a history of looking at things with that lens.

So I'll turn it to... Yeah, so let's get back to your question, which is, do we think it'll be important? And maybe Terry can comment on that.

Absolutely. I mean, sure, the recurrent population, as Lisa said, is seen as a fairly homogeneous population. And I think the person who summarized that best was Dr. Carl Crawford in the investor event that I referenced in my prepared remarks back in December where he described this fork in the road. So, you know, it's clearly also important, you know, having the broad label and being able to serve a broad population. Because as you look at the epidemiology of the disease, quite a few of our patients are considered in that first recurrence pool, right? So we're very eager to finalize our label with the FDA and determine our path forward from there.

Great.

That's super helpful. And good luck with everything. I know you guys have been putting a lot of work getting ready.

Thank you, Ted.

Thanks, Ted.

Chris Shibutani with Goldman Sachs. Your line is open.

Hi. Thank you for taking our question. This is Steven on for Chris. I was wondering if you could comment on what key launch metrics that you and Nestle plan to share during the early launch so that we and investors can track the launch. And also, related to that, will prescription trend data be available through services like IQVIA? Thank you.

Yeah, thanks for the question. I'll start, and maybe Terry can add some color. We have not gotten to the point where we've disclosed what the launch metrics will be. We are in the process of working through that with our partners at Nestle. We have said, and we can reiterate, that there are 156,000 cases of recurrent C. diff in the U.S., and I think our enthusiasm has only grown based on our recent interactions with HCPs. But maybe, Terry, you can comment further on how we think about metrics, and then, you know, we will be coming to the street in the relative short term with a set of parameters that we expect to provide.

Yes, I think the only thing I can say to build on that is maybe to tackle your second question, which is around the availability of prescription data. We're not anticipating that that would be broadly available because we are, as I mentioned previously, going to be very careful and deliberate with our distribution partner selection. We are working with a small number of very experienced specialty pharmacies in order to provide the best in class patient experience when physicians and patients deem to use CR109. So we really want to control that experience. And so one way to do that is by being very selective with distribution partners.

Thanks for the question. Thank you very much. Thanks for the question.

Peyton Vonsack with TD Cowen. Your line is open.

This is Peyton. I'm for Joe. Congrats on the very productive last year, and thanks for taking our questions. I was guessing just maybe the first one. How are you thinking about pricing, especially given that Ruby.io is now available? Are you evaluating something comparable per course?

Yeah, Peyton, good morning, and thanks for the question. So I think that the way we would say this, we don't think that there are great comps in the space for 109. And as we talked about actually at the conference yesterday, really what we think about when it comes to price is value. What kind of value are we delivering to the patient in terms of efficacy, in terms of safety, in terms of route of administration? And in the recurrent C. diff space, there just hasn't been the type of profile that we have with SIR-109. And as Terry and I have interacted with HCPs, I think that that resonates with us, that this is different, right? And the type of value and the type of innovation that we're delivering is not comparable to standardized FMTs, not to antibodies, not to other types of antibiotics. It just is different. So we are in the process of working with our partners at Nestle to – to finalize a price that is reflective of the value that we can provide, but also represents the opportunity to deliver value to the system. If patients recur, they're more likely to recur again. And if you think about the cumulative costs of recurrence upon recurrence, these can be really sick patients and they can have comorbidities. So if you can stop that cycle of recurrence You can create value for the patient. You can create value for the system. We think we can create value for shareholders. That's a win-win. So that's how we're thinking about it.

Great. That's really helpful. I mean, I guess now moving on to the SARE 155 program, and we're looking forward to the data update in May. Could you maybe comment about, like, the level of excitement and feedback for the therapy you've seen at the initial site and in cohort one? And maybe give a range about how quickly you're thinking cohort two can be enrolled based off that feedback and what you're thinking about in terms of success for cohort two.

Yeah, maybe I'll ask Lisa to comment on both, Peyton. I mean, we have a lot of excitement, I'll tell you. You know, there's a disproportionate amount of our time, energy, and I think yours and others focus on 109. But we think that 109 is really just the beginning of the story as it relates to cohort the microbiome and our ability to help patients. So 155 is up next. We were really pleased to clear the pre-planned DSMB at the end of the year and go into cohort two. We were really careful and deliberate with the first cohort, knowing that this is a fundamentally more complex patient population than what we've dealt with in the past. But we have increased the number of sites into the second cohort, and we do expect to move more quickly. But maybe Lisa can comment more on the the excitement within our partners on the HCP side as it relates to 155?

Yes. Excitement really has been very sustained. I mean, this is a big problem. Both infections and GVHD are big problems in this population, and there are no great options. And I think we're doing this trial on the backdrop of a time when antimicrobial resistance is also really coming to the fore as an issue for patients who need a lot of antibiotics, and that's certainly this population. So we have a lot of interest, and we expect that interest to continue to fuel enrollment in Cohort 2. And you asked about the kinds of things we're looking for. I think some of the same things we'll be looking for in Cohort 1, including the engraftment and function of the bacteria. pathogen reduction in the GI tract as well as clinical sequelae such as reduction in neutropenia and fever, potential reduction in infection, and reduction in bloodstream infections in particular.

And maybe we can ask Matt just a comment. You know, as usual, Peyton, our microbiome analyses and our clinical studies we think are incredibly important data sets. And maybe Matt can comment on how we think about the one that's coming up with 155 in the first cohort.

Sure. I think Lisa hit on the key points, but from a pharmacological data perspective, we really are focused on some of the key mechanisms of action of the drug. So, of course, engraftment is going to help inform our dosing strategies in this particular population. As Eric and Lisa pointed out earlier, we had a favorable report from the Data Safety Monitoring Committee with respect to cohort one. So, of course, observing drug on board and having that favorable safety profile will be something we'll be looking for. And then in terms of actually trying to understand the drug's pharmacology with respect to infection, we will be looking at the reduction in bacterial pathogens. And, of course, that has significant meanings on a couple different fronts. One, as we reduce that abundance, we would anticipate decreasing the likelihood of translocation events, so the bacteria moving from the gastrointestinal tract into the bloodstream to lead to bloodstream infections, as well as the potential reduced patient-to-patient transmission. So we'll be looking at those types of factors. And of course, SEER-155 is a designed consortia that was optimized for a certain set of pharmacological properties that include this pathogen abundance, but as well as protecting and repairing the epithelial barrier. And so we'll be looking for those types of signatures in the data as well.

Great. Thank you so much. That's super helpful, and thanks for taking our questions.

Thanks for the questions, Peyton.

There are no further questions at this time. It is now my pleasure to turn it back over to management for final remarks.

So thank you, operator, and thank you all for joining us this morning. We look forward to keeping you updated on our progress. Thanks again and have a great week.

This concludes today's call. We thank you for your participation. You may now disconnect.