Seres Therapeutics, Inc. (MCRB) Earnings Call Transcript & Summary

Good morning, good afternoon, and good evening, depending on where you are. Thanks for joining us today. My name is [ Ruben Vaxidov ], and I'm a member of the JPMorgan team. It is my pleasure to introduce to you Eric Shaff, President and CEO of Seres. Eric, I'll turn it over to you now.

Well, good morning, everybody, and thank you to JPMorgan for bringing us together virtually today. We're very pleased to participate in this year's conference. I'll start by saying, I hope everyone on the line, is healthy and well. We look forward to speaking together in person. I'm optimistic that, that's becoming closer on the horizon. So on the session, I'm joined by members of the Seres team, and we will allocate time at the end for Q&A. So I think it's fair to say that we're off to a particularly turbulent 2021, at least from a geopolitical point of view. And all of us are happy to turn the page on 2020, but as challenging as 2020 was for all of us, it also was a tipping point, we believe, for Seres Therapeutics and for the microbiome space in general. In any new modality, there can be a moment or events that provides real conviction that a technology is here to help patients. Not decades off in the future, but really now. And we believe that we hit that moment with our Phase III SER-109 results that we released earlier this summer. Seres is leading the way in creating a new treatment modality through the microbiome in recurrent C. diff, but also in additional therapeutic areas where we know that the microbiome has a direct connection to human health. So we're pleased to be here to connect with you and talk about it -- talk about our work in helping patients with microbiome therapeutics. So on the next slide, I will be making forward-looking statements in today's presentation. So as usual, we would refer you to our safe harbor statement in our last 10-K and risk factors for your review. So on Slide 3, Seres' mission is to transform the lives of patients worldwide with microbiome therapeutics. Now that doesn't mean incremental improvements in patient care. It means its significant advancements. And in doing so, we have a clinically demonstrated approach for treating serious human disease by using bacteria as therapy, right? By modulating the human microbiome from a state of injury or disorder, what we call a dysbiosis to a state of health. And we know that the microbiome is essential to human health and disruptions to a healthy microbiome can have direct connections to serious diseases like C. diff infection, like IBD and specifically ulcerative colitis, oncology and others. And we think that the time is really now for the emergence of the microbiome as a new modality medicine. Now on the next slide, as I mentioned before, we believe that 2020 was a major inflection point for the company and for the space. And I think it was a profoundly important moment that provided clear evidence of the power of our approach. For patients with recurrent C. diff, which is a disease area that really hasn't seen meaningful innovation in decades but also more broadly. And as a company, we are incredibly excited about the path forward and where we go from here, seeking to bring [indiscernible] to patients in need by enrolling our open-label study to support a BLA submission, but also by continuing to prepare our commercial endeavors, but also continuing to move forward in other areas, applying our know-how on our capabilities to help patients beyond just recurrent C. diff. We're proud of our scientific approach to the journey that was associated with SER-109, learning lessons, applying a rigorous scientific approach and we believe that we have built an R&D machine that we can apply to help patients in a number of different additional areas, including our SER-287 Phase IIb study, but also in areas beyond. So Slide 5 lays out our pipeline. It starts with SER-109 for recurrent C. diff infection. of course, we read out our top line results. And now our microbiome analysis, which we'll talk about in a minute for our Phase III study. Just for background, SER-109 is an orphan breakthrough designated program by the FDA, and we have seen remarkable data that we think will meaningfully change the game for patients. SER-287, where we are actively enrolling patients in a IIb study following the really encouraging results from our Ib study as designed, the FDA has told us that this IIb study could be 1 of 2 pivotal studies with compelling clinical results. SER-301, which is a fermented or designed approach to IBD or a follow on to SER-287, where we are actively enrolling and dosing patients in the study in Australia and New Zealand. SER-401, which is intended to increase the efficacy of checkpoint inhibitors in immuno-oncology. And SER-155, which is approaching an IND for infection, bacteremia and GVHD, again, using our defined fermented technology platform. So deepened focus within these programs supported by our collaboration efforts with really world-class leading partners. So I'd like to start by talking about our efforts in infectious disease and specifically in C. diff. And of course, we're excited by this Phase III program, our recent readout. The company was founded with the insight that while fecal transplants can provide a sort of a proof-of-concept that you can modulate the microbiome to a patient's benefit, that there has to be a better way to help patients in the space that hasn't seen meaningful innovation in some time. A more scientific approach, a rigorously studied approach, a GMP manufacturing approach, an oral approach, and we really think that SER-109 is the right solution to help patients in this very difficult disease. So on Slide 7, just as a reminder, the trial design, 182 subjects with multiple recurrent C. diff infection, one that one active to placebo. We announced last patient in last March. I will say that we worked through a very complex COVID environment to ensure that patients weren't lost. And by requiring a positive cytotoxin test on the front end and the back end of the study, we feel that we had the most rigorous study design and would have the most interpretable data set because of their requirement. Now the study results were remarkable. An 88.9% sustained clinical response rate for those patients treated with SER-109 versus 58.7% for those in the placebo group on Slide 8. So a 30.2% absolute delta and reduction in recurrence, which is a significant effect for patients with very challenging treatment options in the multiply recurrent segment. The study was statistically significant in our age stratified groups. And if you do the math, a number needed to treat of approximately 3, which if you look at commercial comparables, put SER-109 and some fairly remarkable company. So on Slide 9, the safety profile was favorable in the study as we expected it would be. Remember that these are organisms that have coevolved with us over millions of years. And certainly, we think that our approach with SER-109 utilizing our CMC process that includes pathogen and activation steps in addition to donor screening, differentiates SER-109 as an approach versus other therapeutic approaches are certainly unregulated procedures like FMT. We have seen significant concerns related to patient safety in this space, donor screening alone, which is the approach that tends to be taken by FMT and FMT like approaches, we believe it's inherently reactive and insufficient to support patient safety. You can treat them for the pathogens that you know about. But obviously, you can't treat them for those that you don't know about, which this past year, unfortunately included COVID-19. So the FDA put out an alert last March, warning about the potential transmission of COVID-19 through feces. Our approach is different. So we include pathogen inactivation steps as part of our CMC processes that are intended to kill all vegetative bacteria and viruses. Now on Slide 10, as a company -- for those that have followed the company, you know that we believe that our microbiome sciences capabilities and insights are really field leading and a critical component of not only how we navigated through the SER-109 Phase III result, but how we're pioneering microbiome approaches in other areas. I'm pleased to share some new data from our ECOSPOR III study, our microbiome analysis, which, of course, was gated by the unblinding of our top line results. So we started that work this past summer. We'll present these results in detail at a scientific conference next week, but just for top line, our initial PK/PD data demonstrate that the bacteria and SER-109 populate the GI track rapidly and modify the metabolic landscape of the gut, such that it is unfavorable to C. diff. As shown in the left panel here, by week 1, SER-109 bacteria have been graft with significantly greater engraftment as compared to placebo, and it's durable through week 8. And furthermore, the engraftment of SER-109 and bacteria broadly modulated the gut microbiome and led to significant decreases in the abundance of primary bile acids, which are needed for C. diff spore germination, increased secondary bile assets that inhibit C. diff growth. So we're thrilled with the microbiome data. It shows what we had hoped to see, expected to see and certainly support and corroborates our clinical results. Now on Slide 11, the question is, where do we go from here? We have the remarkable Phase III efficacy and safety results, as we have said previously. We significantly exceeded the bar that the FDA had indicated to us was necessary for a single pivotal study. We now have the microbiome analysis, which is supportive of our clinical results. And now we're actively enrolling our open-label study. The FDA has asked us for at least 300 subjects on drug. We are in the process of fulfilling that requirement. So increasing the number of sites. As we have previously mentioned, the FDA has allowed us to include first recurrent subjects, which we think is an encouraging data point, and of course, increases the pool of patients. The largest provider of FMT in the U.S. continues to be shut. And of course, for us, the Phase III data itself, we believe, is the greatest draw to this open-label study. Of course, the knowledge that patients know they will not be getting a placebo in this terrible disease. So all the reasons that we think we will move forward with this. Of course, we are conducting this study amidst the pandemic and operationally, it really is our highest priority. So on Slide 12, just to talk a little bit about the opportunity, which we think is considerable here. Just for background, C. diff is the largest nosocomial infection in the U.S. It's an urgent threat, as designated by the CDC. And it's estimated that approximately 20,000 people or more die each year from C. diff in the U.S. So it's a major health care issue and when you get to know the nature of the disease, you understand that you're more likely to get C. diff, once you've already had it. And once you get into the recurrent C. diff patient population, which is the group that we're looking to help with SER-109, it's an orphan disease, it's a high unmet medical need, it's extremely costly to the system, and there are, we believe, inadequate solutions, say, for patients in the space. So on Slide 13, in addition to our clinical and our regulatory efforts, we've also been working diligently to prepare to bring SER-109 to patients. So coupled with our clinical results, our external research and stakeholder feedback have been highly favorable. Payer value perception, which is illustrative of the value associated with highly effective therapies, likelihood of prescription from potential providers with a greater than 75% high level of intention to use the product, comparatively high marks. And we think that there's work to do where we can improve the education and the understanding of what SER-109 is, what it does in microbiome therapeutics in general. So we think that we have a highly innovative, first-in-class therapeutic that has demonstrated a significant degree of efficacy, oral administered capsule, favorable safety profile for very ill patients and ultimately, what stakeholders are looking for -- clinicians, payers and certainly, more than anybody, patients is a therapy that can stop or break the cycle of recurrence, the vicious cycle of recurrence, and we believe that we have a unique opportunity with SER-109 to accomplish that goal. So on Slide 14, we are actively preparing for launch. We had initiated some of the long lead time activities to support launch before the Phase III readout, pricing, reimbursement work and a sale strategy, in addition to adding to our existing commercial talent, we have been and are doing the necessary work to put the company in the best position to serve patients with this therapy. So just to summarize, we think that the value proposition with SER-109 is considerable. First and foremost, the data, the oral formulation, the safety profile, coupled with the unmet medical need. We are not pursuing an incremental improvement for patients here. With this profile, we think that we can serve patients with a step function advance to fundamentally change how this disease is treated. So we're very excited about SER-109. Let's next discuss our efforts in inflammatory bowel disease and specifically in ulcerative colitis. We are really particularly excited by the opportunity in UC based on the science, based on the medicine, the unmet medical need, the commercial opportunity, but really, most of all, based on our data. So what we've known about UC for some time is that one of the major drivers of the inflammation in the gut is an altered microbiome. Many of the options that are available to patients today. They treat the downstream symptoms of the inflammation. They attempt to stop it once it's already underway. We believe that a microbiome approach may treat the root cause of the disease. It may do so without some of the same immunosuppressive side effects and it also may be synergistic with other mechanisms of action. So next slide. What we believe about IBD and UC is that this could really represent a very attractive area for Seres where we can help patients. Just for background, there's approximately 700,000 patients in the U.S. and we think that there really is an opportunity and a need for a new approach. Fewer patients than you might think actually achieves clinical remission with current therapies. And importantly, several therapies on the market and in development can carry with them significant side effects, which include immunosuppression. Now on Slide 17, we outlined the fact that there were several drivers of our interest in IBD and specifically UC but there had been several placebo-controlled studies evaluating the impact of FMT on UC. And these studies use repetitive fecal transplants, which is hard to envision as a viable or workable commercial approach, but they do provide proof-of-concept to us showing that the modification of the microbiome can result in improved patient outcomes. So this slide illustrates one of the more recent studies that was in the Lancet impact and remission rates in endoscopy, and we believe that these data were highly interesting for the potential impact of a microbiome therapy in IBD, and we wanted to test it with our own approach. Now the intent of the approach, as you can see on Slide 18, is to impact disease through multiple mechanisms. So in grafting the bacteria and SER-287 with the intent to introduce anti-inflammatory species into the GI tract, to reduce the abundance of the microbiome of pro-inflammatory species and also to seek to improve gut barrier integrity and to restore intestinal homeostasis. So we designed, as you can see on Slide 19, a Ib study using SER-287, which is the consortia of bacteria in spore form. And in this first study, we sought to evaluate 2 key parameters. The first was dose frequency. So patients either got a placebo with 287 daily or weekly. And we also looked at the use of an antibiotic pre-treatment. And the intention of that regimen was, I think, about the potential of the clear and ecological niche or space, that might enhance the engraftment of our organisms into the gut. So the primary objectives for this study were safety and tolerability as well clipping the changes to microbiome as well as efficacy. So just quickly on Slide 20. I'd call your attention to our paper in gastro, which was recently published and covers our results in detail. And I encourage you to go through it. I think it speaks to our scientific leadership in the space. But let me take you through it quickly, started on Slide 21, with the clinical data. And I'll note that with the clinical data, the results were highly interesting. So significant and dose-dependent impact on clinical remission, which is the endpoint that we're focused on, our KOLs are focused on, and importantly, the FDA is focused on. 40% in patients that received vancomycin pretreatment followed by SER-287 daily compared with 0% in patients that received a placebo and a similar story when looking at endoscopic improvement. Now on Slide 22, just to outline the safety profile. Importantly, the profile of 287 was favorable and consistent with the profile that we've seen across our platform now with hundreds of patients that have been treated in Seres clinical studies. And again, remember that these are organisms that have coevolved with us for millions of years. We did not expect to see a serious struggle in adverse events. I will note that one place where we did see a difference was in the GI organ class, where there were actually fewer adverse events in patients that received SER-287 daily, which we think is yet another indicator of drug activity. Now on Slide 23, we're continuing to support our understanding of mechanism with additional data. So on the left, this graph depicts a measure of the engraftment of the organisms in SER-287. There's 2 key trends, which I would call your attention to. The first is that for patients that received the daily arm of SER-287, which are indicated in this pink bar, those patients had the highest rate of engraftment, which correlated with the clinical outcome that we showed second -- previously. We also can note that in the weekly arm, so here in the blue versus the green, we saw a clear benefit in the engraftment of patients that received the vancomycin pretreatment. So for us, this further validates the importance of vancomycin in helping to facilitate the activity of our drug. Another really interesting find was just the durability of engraftment. So here, we looked at fecal samples 1 month after dosing, and you can see continued engraftment. On the right graph, we're showing a broad shift in the composition or the makeup of gut species. And again, the most significant changes you can see where in the vancomycin and SER-287 column, which is shown on the right. Now on Slide 24, using our advanced microbiome biomarker analytics, we've also demonstrated that clinical remission was associated with changes in microbiome and microbe associated with metabolism. So here on the left, you can see SER-287 treatment led to a reduction in the abundance of pro-inflammatory bacteria, again, with the greatest reductions observed in the pink bar, the daily dosing regimen. Furthermore, we've been able to show that there was really a significant treatment effects on the production of micro mediated metabolites that have specific relevance for UC disease, so which include metabolites that have also been identified as microbiome signatures of IBD by the human microbiome project. So together, clinical signals in combination with the microbiome drug PK/PD analyses or our microbiome analyses provide proof-of-concept for us that the microbiome therapeutics represent a novel modality for IBD, and we're really excited about moving forward. So where have we gone? On Slide 25, we're outlining our Phase IIb study. We're actively enrolling subjects in our IIb study. This is the study that the FDA said could be 1 of 2 pivotal studies with compelling data studies designed at 3 arms, approximately 200 subjects. Same patient population is the Ib study, mild to moderate UC patients with active disease. We have a vancomycin pretreatment with SER-287 daily at the same dose that was successful in the Ib study as well as a step down dose. The primary endpoint is clinical remission after a 10-week induction period, and we also will have an exploratory 26-week maintenance follow-up. Now I'll note, as we put out in the press release last week, along with the publication of our paper, we are nearly 90% enrolled in this study, and we expect to have a top line readout in the second half of this year. So in the interest of time, I'm going to provide a streamlined description of our earlier stage pipeline. It really starts with SER-301, which is a next-generation rationally designed live microbiome therapeutic came in for ulcerative colitis. And as we just covered from our SER-287 Ib study, we learned about the key bacterial species that were associated with clinical remission and more about the engraftment dynamics of the different species in UC subjects. Now these insights were combined to design a consortia of bacteria that is intended to modulate the microbiome to reduce inflammation. Now we are actively screening and enrolling subjects in a Ib study that is being run in Australia and New Zealand. And I'll note that we have received a $10 million milestone from our partners at Nestlé Health Science for initiating the study. So we're thrilled to be applying this next-generation technology in the clinic today, and 301 is extremely exciting to us. SER-401, which is a biologically sourced composition for I-O. We are working with MD Anderson Cancer Center and the Parker Institute to explore a microbiome approach in combination with anti-PD-1. As we have said, our screening and enrollment have been impacted by the pandemic. I would say that, of course, this is a Ib study, so we're confident that as we consider options, we will get meaningful data that will inform how we move forward in this program. And then lastly, SER-155, which is a rationally designed fermented microbiome therapeutic candidate for infection, bacteremia and GVHD. It is in partnership with Memorial Sloan Kettering and supported and partnered with Kardex, and we're working with -- towards an IND in this program, which we think is an important step forward in the technology and really aimed at helping a difficult patient population. So we really do see 155 as an extension of our work with 109 with our defined or fermented platform and I think you'll hear more about that as we go through the year. And on Slide 27, what we lay out is that we really think that this is just the beginning for microbiome therapeutics. So we have a focused pipeline today in infectious disease in IBD and IO. And we think that our programs are each unique opportunities to help patients, but there are an attractive set of adjacencies in each of these therapeutic areas that are potential areas of further development and exploration for Seres. And we believe that our reverse translational approach supports an R&D machine in areas today and in the future, perhaps beyond where we are focused today. And we've illustrated some of those areas on this slide. Now on Slide 28, I would note that we believe that we have capabilities as an organization that supported the success of SER-109 and really are critical in our approach to additional programs and opportunities. And in this new modality, there are skills, there's know-how, there's tools, there's approaches, which are simply not commoditized. And we feel strongly that CMC is one of these where we have long been working on our approach to our biologically [ source ] platform as well as our synthetic platform. And as perhaps more eyes to send upon the field, I think that there will be a greater recognition that these are in fact a strategic capabilities that position us for success. Now just to conclude on Slide 29. We are extremely grateful to have executed on our plan for SER-109. And our Phase III readout really allowed the company to support the balance sheet in a meaningful way over the summer, which allows us to continue to work towards bringing SER-109 to patients. And certainly, the open-label is the leading activity in that pursuit but it also allows us to continue to prepare to commercialize the product. So obviously, there was a great deal of momentum that was generated by SER-109. But by no means do we believe that, that is the full story for Seres. There are a number of opportunities for us to deploy our know-how, our expertise, our capabilities to help patients, and we think that SER-109 is really just the first step. So this will be an important year. We expect to read out top line results for our SER-287 Phase IIb study in the second half of this year. We initiated our SER-301 study last year, and we are continuing to enroll patients in a study in Australia and New Zealand. We expect to start our SER-155 study this year. So obviously, these items and others, there's a great deal going on at the company right now. I would say that last year was a critically important year but we're looking forward. And we're as excited about what's ahead for Seres and for the microbiome space and for our ability to create significant value for patients going forward as we have been in the last year. So with that, I appreciate your time, and we're happy to open up the call to Q&A, and I'd invite my colleagues to join me.

Okay. We have a few questions here. So why don't we start with the first one. Could you please provide an update on your collaboration with Nestlé? Eric, do you want to take that one?

Sure. Nestlé has been a critical partner to the company for some time. They participated both as an equity investor, and we announced the collaboration actually at JPMorgan, I think it was a number of years ago, where we have partnered with them on 109 as an example as well as 287 and 301. We maintain North American rights. They have ex-North American rights. And they've been a terrific supporter of the company, both in terms of financial support as well as know-how. We have talked with them about the Phase III SER-109 results. They're obviously thrilled with them. And together, we'll think about the right way to bring the drug ex-North America. I will say that we -- and I think I mentioned this as part of my prepared remarks, but we received a $10 million milestone for initiating the SER-301 study, which has continued to provide significant support financially to the company, particularly in the last couple of years where our resources were somewhat constrained. So, they're a great partner, and we continue to work with them in a very positive fashion.

Okay. Next question we have is, do you anticipate that a diagnostic would be required to prescribe SER-109? And why don't I ask Lisa von Moltke, our Chief Medical Officer, to take that one?

Sure. We would not anticipate a diagnostic because we would not anticipate that FDA would try to dictate how to make a diagnosis of recurrent C. diff. C. diff is a clinical diagnosis that can be accompanied with a number of different testing algorithms, depending on the location, and locations do what they need to do to try to balance the specificity and sensitivity that's needed for the diagnosis.

Thank you. Okay. The next question we have is a 2-part question. How do you see SER-109 fitting into the treatment paradigm for recurrent C. diff infection? And do you expect to obtain a label that includes patients with a first recurrence of disease? So why don't I ask Terri Young, our Chief Commercial Officer, to take the first part and then maybe, Lisa, you can take the second part?

Thanks, Carlo. So first of all, treatments today, as Eric outlined in his presentation, really do not bring the profile and results that HCPs and patients are looking for, and our health care system is also bearing this burden. The recent feedback from stakeholders that Eric shares also reflects this. Secondly, we know that the presence of any recurrence of C. diff infection is a marker for a disruptive microbiome. In fact, at the very first recurrence, you know that microbiome repair is urgently needed, making a very strong argument in all 170,000 of the annual cases in the U.S. for offering SER-109 to these patients. So Lisa, do you want to comment a little bit on sector labeling?

Yes. So just to start, we all know that labeling is always a result of the discussion with FDA that happens after the filing. But based on the disease pathophysiology, as Terri said, once a patient recurs, it doesn't matter whether it's the first recurrence or later recurrence, it's an indicator that they have a microbiome issue in terms of needing repair. And so it makes sense to us medically as well as to our KOLs that these patients should be treated with something that repairs their microbiome and not just with more antibiotics.

Thanks, Lisa. Okay. The next question we have...

Carlo, I would -- Carlo, I'll just add one additional comment to Lisa's comment, which is -- and I mentioned this in the prepared remarks, but we had asked the FDA to allow us to include first recurrent subjects in the open-label study to which they agreed. So as Lisa said, label will be determined at the end of a BLA process, but we're encouraged by the data point and how the FDA look is thinking about the field.

Thank you. Okay. The next question we have is, could you provide further detail on the learnings you obtained from your Phase III microbiome data? And do these results provide support for the higher dose of SER-109 that was used in the Phase III study? And I'll ask Matt Henn, our Chief Scientific Officer, to take that one.

Sure. So as Eric pointed out, we observed a very strong engraftment signature of the SER-109 bacteria and an associated shift in bile acid metabolism in the gut, which has importance to and disease relevance for C. diff being that primary bile acids are needed for C. diff spores to [ generate ] and secondary bile acids prevent C. difficile infection. Across our CDR trials, we've observed that if subjects recur, they do so early. We typically see recurrences within the first 2 weeks if subjects recur. And one of our goals in increasing the dose in the Phase III study relative to the dose that is in the Phase II study was to ensure that we maximize that engraftment signature by 1 week after subjects been on drug. And also that we reduce the actual variability in those engraftment kinetics across the patient population. And the data that we have from our predefined endpoints for the microbiome and the trial strongly support that our hypothesis going in the trial of an increased dose to achieve the PK and PD dynamics that we wanted or borne out and well supported and support the clinical outcome results.

Thanks, Matt. Okay. The next question is with regard to SER-287. And what is the bar for success for your Phase IIb study? And if this study is positive, what would be the next steps for further development? And I'll ask Lisa to take that one.

Sure. As Eric mentioned, we've got a lot of therapies out there right now that really don't provide a lot of relief for this condition. So if we see the kinds of improvements that have been seen in some of the blockbusters that are out there. And you can look at charts and see things that are differences from placebo is in the low double digits, if you see -- if we were to see something that's a clinically meaningful benefit and this kind of safety profile, this would be a big win because these folks, particularly in the mild to moderate groups are really not that keen on taking on therapies that have these very significant safety concerns. So that and the potential ability to combine therapies would be a big hit. So the question about what might be next. I think we've already spoken to the fact that this could serve as 1 of 2 pivotal trials. And so one could envision a second study that hooks induction into maintenance, rounding out a very nice development package.

Thanks, Lisa. I'm not seeing any further questions. So I'll turn it back to Eric for any closing remarks.

Thank you for your [indiscernible] attention, and we look forward to connecting with you soon. We hope that everyone is healthy and well and happy new year. And thanks very much.