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

Good day, and welcome to the Seres Therapeutics Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dr. Carlo Tanzi, Head of Investor Relations. Please go ahead, sir.

Thank you, and good morning. Our press release for the approval of VOWST became available yesterday evening and can be found on the Investors and News section of the company's website. We have posted slides accompanying this call on the Seres website, and I encourage you to view those during the presentation. I'll also remind you that we will be making forward-looking statements, including the availability of VOWST product supply, the degree of market adoption, penetration and accessibility, the results of payer engagement, the overall potential of microbiome therapeutics, the potential of future milestones, the ability 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 Shaff, Seres's President and CEO; Dr. Lisa von Moltke, Chief Medical Officer; Dr. Terri Young, Chief Commercial and Strategy Officer; and David Arkowitz, Chief Financial Officer and Head of Business Development. During the Q&A portion, Dr. Matt Henn, our Chief Scientific Officer; and Dr. Dave Ege, Chief Technology will also be available to answer your questions. With that, I'll pass the call to Eric.

Thank you, Carlo, and good morning, everyone. We'll start our presentation on Slide 4. I am delighted to announce that the Food and Drug Administration has approved VOWST formerly known as SER-109. VOWST is indicated for the prevention of recurrent C. diff infections in adults following antibiotic treatment for recurrent CDI. We believe VOWST has the opportunity to transform the management of recurrent C. diff infections and provides a meaningful new therapeutic option for patients. In addition, we are very pleased with the label that we have received. Adult patients who could benefit from using VOWST per the label can access it, including those with a first recurrence. Before we go further into VOWST , I wanted to acknowledge this moment for our company. Seres was founded over a decade ago by flagship pioneering based on the fundamental question, what if you could use bacterias therapy. Over the last decade, we've worked to answer that question by building a proprietary platform capabilities intended to design, develop and manufacture bacterial consortia. Our mission is to transform the lives of patients with revolutionary microbiome therapeutics. We are on the cusp of making that mission a reality with the first orally administered microbiome therapeutic approved by the FDA. As is typical in drug development, pioneering the creation of a new therapeutic modality has required skill diligence and a great deal of work. Our team persevered through some tough moments, including the unexpected Phase II results obtained in 2016. But our team has shown tremendous grit and followed the data in order to learn and optimize our approach. Based on our scientific and clinical learnings, we made important modifications to our Phase III development program and we were ecstatic to see this work pay off with a remarkable SER-109 ECOSPOR III results. Developing a new treatment modality is difficult, and we will likely continue to need to overcome future obstacles. But we've proven that our team has the culture and scientific capabilities to persevere and succeed. The FDA approval of VOWST is a testament to the unique capabilities and can do attitude of the Seres team, and I couldn't be prouder of their accomplishments. The approval of VOWST is an incredible moment for Seres, and we think it's just the beginning of what is possible with microbiome therapeutics. We believe that our microbiome approach has the potential to address a range of infectious diseases and other serious indications with new therapeutic options. We have shown that Seres can develop effective, orally administered microbiome therapeutics that are well tolerated by patients and can change the gut microbiome and modulate its function in ways that improve human health. Our R&D team continues to advance a portfolio of drug candidates in our pipeline, which I'll address in my concluding remarks. Moving to Slide 5. Seres has a productive long-term collaboration with Nestle Health Science that dates back almost 10 years, and we look forward to now co-commercializing VOWST in the United States with Nestle. In a few minutes, Dr. Terri Young, our Chief Commercial and Strategy Officer, will speak to how we will work together to capture the commercial opportunity for VOWST. First, I'd like to pass the call to Dr. Lisa von Moltke, our Chief Medical Officer, to share the supporting data and profile of VOWST.

Thanks, Eric. On Slide 7, I'd like to begin with an overview of C. difficile infection and the burden this disease creates for patients and the U.S. health care system. C. difficile is a spore-forming, toxin-producing, gram-positive and aerobic bacterium. C-difficile infection manifest in simple diarrheal illnesses in some patients but can be as severe as colitis that can cause hospitalizations in many individuals. Antibiotic therapy is necessary to treat the initial infection but can leave patients at risk for future recurrence. When the microbiome is significantly disrupted for any reason, such as by the use of broad spectrum antibiotics, C. difficile spores can germinate into toxin-producing bacteria. C. difficile infections create a substantial health care burden and have been characterized as an urgent health threat by the Center for Disease Control and Prevention, the CDC. Recurrent CDI is not an easy cycle to interrupt and often results in hospitalization and can even lead to death. There are 156,000 recurrences in the United States per year and at least 20,000 deaths due to C. diff infections. Approximately 50% of all patients with recurrences have a CDI-related hospital readmission. Patients with C. diff infections suffer debilitating symptoms, such as frequent diarrhea up to 15 times a day that prevent them from conducting their normal daily activities and these symptoms significantly lower their quality of life. Quality of life data suggests that patients often feel anxious, depressed, lonely and socially isolated and the burden persists even after the active infection clears. They often live in fear not knowing if their CDI will return again. Their doctors have had limited options to prevent recurrences. Moving to Slide 8. C. difficile infections are unique because of the 2-phase life cycle of a C. difficile organism. Antibiotic treatment is necessary to remove vegetative cells but is often insufficient to prevent a recurrence. A microbiome disrupted by broad-spectrum antibiotics can allow C. diff spores to germinate into toxin-producing bacteria entering patients into the cycle of recurrent infections. Restoration of a healthy microbiota after antibiotic treatment can inhibit spore germination and prevent recurrence of infection. VOWST is designed to restore the microbiota. VOWST is a consortium of Firmicutes bacteria in their spore form. Firmicute spores have been shown to germinate into bacteria that have been observed to inhibit the germination and growth of C. difficile spores though the exact mechanism by which post induces effects has not been established. VOWST bectarial spores are resistant to gastric acid, allowing formulation into oral capsule. Our manufacturing process is designed to ensure product consistency and mitigate the risk of pathogen transmission. Slide 9 shows the summary of VOWST label. VOWST is indicated for the prevention of recurrent C. difficile infections in adults following antibiotic treatment for rCDI. Importantly, this indication is for the broad population of adult recurrent patients. Both has a straightforward oral dosing regimen of 4 capsules once a day for 3 days, following antibiotic treatment and use of a laxative to remove residual antibiotic from the GI tract. VOWST is stored in the original packaging and has no refrigeration requirements. The full label is available on VOWST's website. Most approval was supported by 2 Phase III studies, which I'll summarize in the next few slides. Slide 10 shows an outline of VOWST clinical data from our Phase III study, ECOSPOR III which enrolled 182 patients with multiply recurrent C. diff infections. Our study subjects were treated with either vancomycin or fidaxomicin for 10 to 21 days as per investigator discretion. Subjects were then randomly assigned one-to-one to either VOWST or matching placebo administered orally for 3 days. Subjects were stratified by age, so age 18 to 64 years old or 65 and over, and by the antibiotic they receive for rCDI. The primary endpoint was the proportion of subjects who had CDI recurrence by 8 weeks after dosing. CDI recurrence was determined by the return of diarrhea, the need to reinitiate CDI antibiotics and the confirmation of the clinical diagnosis with a positive toxin test. This Phase III study met the primary endpoint with a highly statistically significant reduction in the relative risk of C. diff recurrence. The results indicated that approximately 88% of patients did not experience a recurrence at the primary 8-week endpoint compared to 60% in the group with antibiotics alone. We also evaluated VOWST efficacy over longer periods of time, and we observed durability of response out to 24 weeks. Slide 11 provides an overview of the safety information from the Phase III ECOSPOR III study. VOWST was well tolerated and patients administered the drug had no serious treatment-emergent adverse events or deaths that were attributed to study drug. The most common AEs were mild to moderate in nature and included abdominal distention, fatigue, constipation, chills and diarrhea. These AEs were also observed in patients in the placebo arm. Slide 12 summarizes the adverse reactions reported on the VOWST package insert. These data further highlight how well tolerated VOWST was. Following receipt of the positive ECOSPOR III data, we had further discussions with the FDA regarding the requirements for a BLA filing. At that time, the FDA indicated that they would require a total safety database that included at least 300 patients followed for 6 months. Based on that guidance, we subsequently enrolled a study, ECOSPOR IV which was an open-label, single-arm study that included over 260 additional individuals. Slide 13 shows the safety profile from ECOSPOR IV. Overall, safety profile on ECOSPOR IV through 24 weeks of follow-up indicated that VOWST was well tolerated with the most common AEs being flatulence, diarrhea and nausea all at rates of less than 5%. And this was consistent with the safety profile observed in the placebo-controlled ECOSPOR III study. No serious adverse events were considered related to VOWST. On Slide 14, we show an overview of the CDI recurrence rates in ECOSPOR IV. Overall, we observed that 91% of subjects were free of recurrence at up to 8 weeks, which was remarkably similar to the 88% rate observed in ECOSPOR III. This study included a meaningful proportion of first recurrent patients where we observed that only 6.5% of patients experienced a recurrent meaning 93.5% remained recurrence free in this group. Our clinical results in this first recurrence population are consistent with our understanding of the underlying pathophysiology of the disease which is believed to be similar across our CDI patients regardless of the number of prior episodes. We have engaged clinicians and other stakeholders throughout the development of VOWST. We continue to hear their enthusiasm for an oral therapy with the efficacy results and safety profile that VOWST has. We are now excited to bring VOWST to them and their patients. I'd like now to pass the call to Terri to describe the commercial opportunity for VOWST.

Thank you, Lisa, and good morning, everyone. As Eric said earlier, this is an incredibly exciting day for patients, HCPs and for all of us at Seres Therapeutics who've worked so hard over the past years to bring VOWST to patients. We believe we are on the cusp of the paradigm shift in the management of recurrent seat of infection. For the first time, HCPs will be able to stop the vicious cycle of CDI recurrence in approximately 9 out of 10 patients by restoring the microbiome with an easy-to-administer oral therapy. We, therefore, believe that VOWST has the potential to become a new foundational option to prevent our CDI. We and our colleagues at Nestle Health Science are focused excited and ready to deliver an innovative treatment option to help HCPs more effectively manage the estimated 156,000 cases that they will encounter this year alone. I'll dive then on Slide 16. During our investor event last December, you may have heard Dr. Carl Crawford from Weill Cornell Medicine describe recurrences C. difficile infections as the bane of his existence. And on the left-hand side of the slide, you can view his perspective regarding what the approval of VOWST could mean for both him and the patients he treats. Our recent interactions with HCPs at Congresses and in market research reaffirms a broad need for better options to prevent recurrence. VOWST uniquely fills that unmet need as the first and only microbiome therapeutic with robust efficacy as observed across our clinical programs and in a well-tolerated 3-day oral regimen that a patient can self-administer in his or her own home. As a result, HCPs indicate a high intent to prescribe VOWST. As you can see in the accompanying graph, approximately 75% of surveyed physicians indicated that they definitely or probably will prescribe VOWST. These are highly supportive numbers, not often seen for new product launch, especially within an entirely new modality. On the next slide, HCPs consistently tell us that preventing recurrence as their top treatment goal for patients with our CDI, yet they also tell us that preventing recurrences remains their top unmet need reflecting the inability of standard of care to deliver. Gastroenterologists, infectious disease specialists and other HCPs expressed the need for a product profile like VOWST, a highly efficacious and well-tolerated therapeutic for preventing recurrences of rCDI. Moving to Slide 18. Given the high unmet -- level of unmet need in the category, it's no surprise that many of the physicians who regularly treat rCDI have patients in mind for initial trial of VOWST. This is very typical for a new therapy, where HCPs initially choose to try a new option with a patient who is in dire need of something better. These same HCPs tell us that after an initial trial period, they fully expect to expand use to the broader population of rCDI patients. Over time, we expect a paradigm shift away from antibiotic use alone with significant penetration of antibiotic share as utilization of a multistep regimen takes hold. We are excited about the ability to fundamentally change this landscape. Moving to Slide 19. I'll take this opportunity to remind you that at launch, we will be focused on patients who will complete their treatment for rCDI in the outpatient setting, where the medicine will be reimbursed via the outpatient pharmacy benefit. We also plan to focus on the HCPs to CMS patients and who may have a propensity to adopt VOWST earlier than their colleagues. We will be deploying our field teams to reach the top writers and the top volume institutions with the 150-person Nestle Health Science gastroenterology field team and a new 20-person hospital team that was hired by Nestle in Q4 of last year. Our colleagues at Nestle will be training these 2 field teams on the final label for VOWST in the coming days and will then pivot to full deployment. As a reminder, the Nestle gastroenterology team already covers 85% of GI practices for their current in-line products Zenpep. This is a highly experienced team, bringing an average of 10 years in pharma and 5 years in GI. It's also a team that has successfully accelerated Zenpep growth after Nestle acquired the brand. The hospital team will cover the top 300 hospitals in terms of rCDI patient volume as well as engage infectious disease physicians in these organizations. Recall that this team was deployed in Q1 to start profiling top institutions. They will now pivot to work directly with key HCPs at the institutions to ensure that VOWST is readily available to patients at discharge. Within the prescribing universe for rCDI, there is a significant group of physicians who may only treat a single patient with a recurrent CDI each year. It would not make sense for those physicians or for us, to engage them with a traditional field model. Instead, we will be investing in nonpersonal promotion to drive awareness of VOWST for this group of HCPs as well as for the patients who may see them. As you might imagine, Nestle, as an organization has a deep understanding of digital engagement customer models, and we would be leveraging those capabilities for VOWST. Moving on to Slide 20. It is important to us that every patient who needs VOWST to prevent a recurrent CDI has the chance to get it. We remain mindful of the narrow time window a patient has to obtain a prescription, fill it and take the medicine upon completion of their antibiotic regimen. To that end, we are working to get the appropriate coverage to ensure patients have access to this innovation. Last year, we deployed the Nestle Health Science payer field team for VOWST preapproval information exchange. That team is now ready to engage the top payers to continue the process to achieve broad coverage for VOWST. And you can see on the Slide 20, our estimated time line to achieve coverage across the various payer channels. We do expect VOWST to be subject to the typical review and approval processes that each payer uses for new medicines. As a result, we estimate that many patients receiving VOWST early on will need to go through a medical exception process to navigate the new-to-market blocks that payers utilize for new products. Our ability to ensure broad and easy access, especially with the 3 largest PBMs will smooth the way to deliver VOWST to patients. This is particularly important as more than half of rCDI patients have commercial insurance. Moving to Slide 21. Seres understand the high burden of recurrent C. diff infections on patients and on the health care system. This disease takes a toll on patients, both physically and emotionally as well as in posting a significant economic burden on our health care system. VOWST brings an innovative profile, supported by unique safety and efficacy data, thus providing a robust solutions for patients, HCPs and payers. Taking all of this into account and after doing extensive research to understand the value that VOWST brings relative to other options. We, along with our collaborators at Nestle have priced VOWST at the wholesale acquisition cost of $17,500 per course of therapy. This price reflects the substantial value that VOWST offers to patients and society, and of course, is the price before any mandated or discretionary discounts and rebates to payers. We believe this price supports our approach to allow for broad access and foundational use of VOWST for patients with rCDI, including in patients with first recurrence. We are very focused on creating an environment that permits broad patient access to VOWST and plan to provide financial assistance and treatment support for eligible patients through the VOWST Voyage program, which will be managed by our collaborators at Nestle Health Science. Moving to Slide 22. During the initial launch period, we will work to ensure physicians are aware of VOWST that they gain an initial positive experience with it and achieve their treatment goal of preventing recurrence. We will also work to gain broad payer coverage and enhance the ability for hospitals to prescribe VOWST for patients to take in the outpatient setting. Finally, we are focused on providing the support needed to create a positive experience for the patients and HCPs who use VOWST. Once we have made significant progress in these areas, we will then focus on driving repeat HCP use of VOWST and continuing to expand patient access. Our supply and distribution teams across the companies are well prepared for launch, and we expect to have product available in June. In summary, the teams across Seres in Nestle are poised to act upon this historic approval for patients and our companies and will focus on laying the foundations needed to ultimately transform standard of care in the space thereby achieving the full potential for VOWST. I will now turn the call to David to talk about financial considerations for our company.

Thanks, Terri. Now to Slide 24. I'll begin with a reminder of some of the terms of our July 2021 co-commercialization agreement with Nestle Health Science. Per the agreement, Nestle is the lead commercialization party with input from Seres through the joint steering committee and other governance structures that were established when we entered into the agreement. Seres received a license payment of $175 million upfront at the time of the signing of the agreement, and we are now due to receive an additional $125 million based on the FDA approval of VOWST. The agreement also includes sales target milestones, which if achieved, could total up to $225 million. Upon commercialization, we are entitled to share equally in commercial profits and losses. We expect that our 50% share of VOWST operating income or loss will be recognized in our P&L in the operating expense section as collaboration profit or loss sharing related party. VOWST operating income or loss will be determined based on VOWST net sales, cost of good sales -- cost of goods sold and sales and marketing expenses in support of VOWST commercialization. For Seres, all entries related to VOWST commercialization will be recorded to the collaboration profit or loss sharing related party line item on our P&L. In conjunction with our future quarterly financial results, we plan on rolling out key launch metrics to provide additional information regarding VOWST commercialization progress. In addition, Seres is responsible for supplying VOWST inventory to Nestle, and we have been building commercial supply in anticipation of approval. We expect to receive payments from Nestle in the near term related to their purchase of the VOWST inventory that we have already produced. And in the future, we expect a more steady pattern of inventory purchases by Nestle to meet market demand. We are also pleased to announce this morning that we have entered into a $250 million secured debt facility with Oaktree. This is a term loan debt facility and includes $110 million in funding at closing, with 3 additional tranches available after closing, including $90 million in 2 tranches of $45 million each available upon the achievement of certain VOWST sales targets and an additional $50 million will be available at Oaktree's discretion to facilitate potential future business development activities. Portion of the debt financing proceeds approximately $53 million will be used to pay out and retire our existing debt facility. Our cash balance as of March 31, 2023 was approximately $107 million. Our pro forma cash balance as of that date, including the VOWST approval milestone and the net proceeds from our debt financing with Oaktree is approximately $282 million. As a result, we believe that Seres is well positioned to support the commercialization of VOWST and the continued advancement of our pipeline. I'll now pass the call back to Eric.

Thanks, David. Now on Slide 25. We are tremendously excited by the FDA's approval of VOWST. This is an important milestone for our company and demonstrates that our approach can result in FDA-approved medicines for serious diseases. Our pipeline includes programs in multiple disease areas, including both infection and immune modulation. Our immune modulation pipeline includes continued efforts such as those in inflammatory bowel disease. We see the data from VOWST development as scientifically and medically relevant for future development efforts. Clinical data from VOWST studies provide strong proof of concept of the potential of this novel technology to address additional infectious diseases as well as modulate the function of the GI and with relevance to multiple chronic diseases. In the near term, we believe that there are multiple opportunities to protect medically vulnerable patient populations from life-threatening infections with new microbiome therapeutic candidates. Slide 26 describes SER-155. SER-155 is our next program that builds on what we've learned in the development of VOWST. SER-155 is an investigational cultivated consortia that we are developing to reduce the risk of infection including antimicrobial-resistant infections and graft-versus-host disease in patients receiving allogeneic stem cell transplants. SER-155 was rationally designed to target multiple pathways reducing the abundance of pathogens that frequently appear in patients receiving Allo-HSCT and producing metabolites that have the potential to prevent bacterial translocations and reduce GvHD. We have completed the first cohort of our Phase Ib study, which included 13 subjects and was designed to assess safety and drug pharmacology. We expect to report preliminary safety and pharmacology data next month. We have also initiated enrollment into Cohort 2 of the study after clearance from the DSMB. Slide 27 shows our potential path forward in fighting antimicrobial resistant infections. We believe the functions targeted by SER-155 are appropriate for a number of medically vulnerable patient populations at risk for antimicrobial resistant infections. These populations include autologous HSCT recipients and patients with cancer neutropenia. We have a broad portfolio of preclinical programs, and we are on track to potentially deliver 2 or more additional programs in the next 3 years. We are excited by the opportunity to serve patients and build on the proof of concept that VOWST provides. Before we open up the call to questions, we'd like to thank everybody involved in the journey we've been on to discover and develop VOWST. We thank the team of Flagship Pioneering who founded the company over a decade ago and our long-term valued partners at Nestle. We are grateful for the patients who participated in our clinical trials, their families and caregivers and the investigators in the studies. We appreciate the feedback and passion of the C. diff patient community, including patients, caregivers and health care professionals and we would not be here without the tireless efforts of all of our team at Seres. We are grateful to be here today and excited about the path forward. Operator, please open the call to questions.

[Operator Instructions] And we will take our first question today from Joseph Thome with TD Cohen.

Congratulations to the whole team here. Maybe first one, can you touch a little bit just on initial capacity -- production capacity as it stands right now? And maybe where do you sit with Bacthera in terms of expanding that? Is that necessary, especially given sort of the bond label that you were giving. Can you kind of set the stage for that as well? And then maybe the second question, I know you walked through sort of the initial adoption population and then how that might change over time. I guess based on your physician feedback, what sort of a cadence do you expect to really get penetration into that first recurrent patient population. Is that going to take a year, a couple of years? What has been sort of the feedback at that point?

Yes, Joe, thank you for the question. So, on the first, in terms of capacity, I'm going to invite Dave to comment. I'll just start off by saying we feel strongly that we're well positioned to handle a number of different scenarios that we've mapped out. Maybe Dave can comment further talk about where we are with Bacthera and then we can kick it to Terri.

Great. Thanks. So as a reminder, the supply chain for VOWST, supply is well established. It's the same supply chain we used for Phase III and brought us to this point, and we've been manufacturing products for launch for quite some time and we have very favorable room temperature shelf life approved in our label. So we're very happy with the performance of our CMO partner, Recipharm, and we're ready for launch and supplying those various scenarios that Eric talked about to enable redundancy of supply. And we do have the agreement with Bacthera as we talked about, that program is moving along very well. And both of these agreements are designed to increase our longer-term VOWST supply and exists to our -- add to our existing capabilities for the future.

And then, Joe, maybe I can ask Terri to comment on adoption.

Sure. Well, first, let me start by saying we are thrilled with our label, right? It really allows us to reach into the entire population. One of the interesting aspects of this marketplace when we started engaging physicians early on that we realized is that, as I said in my prepared remarks, every physician has a patient in mind who could benefit from a product like VOWST. The interesting aspect of that is that for every physician, it's a different patient. It's a different type of patient. So actually, if you think about that initial trial patient population, it's quite broad and it crosses recurrences. So that's one of the reasons we are very, very excited about the label that we have, and we do expect adoption across the recurrence pool in perhaps patients who are perceived as more severe by the doctor. And that can be driven by medical severity, either they have comorbid conditions or even lifestyle obligations perhaps their caregiver for their family as well as an elderly parent or they're working to jobs. So the patient type really is highly variable and crosses the recurrent population. I hope that helps.

And our next question comes from Mark Breidenbach with Oppenheimer.

Congrats on the approval. Maybe one question in that, David. I was hoping if you could give us a little bit more granularity on the sales target milestones per your co-commercialization agreement with Nestle, what do you have to achieve to trigger those and how well do they mess up with the terms in your debt financing agreement to access the additional tranches of debt per your agreement announced this morning. So that's one question. And then the other question I have is just with respect to whether or not you have an indication on price that CMS is willing to pay for this product? Or is that something that's still yet to be determined?

David, do you want to start.

Sure. Yes. Thanks for the questions, Mark. So as it relates to the Nestle sales milestones, we have disclosed those are at 3 break points $250 million in annual sales, $500 million in annual sales and $750 million in annual sales, and there's $50 million, $75 million and $100 million milestones that accompany those. So those were established when we entered into the agreement almost 2 years ago. We have not disclosed the sales targets that are part of the loan agreement at this juncture. So that's where we stand on that.

And then, Terri, do you want to comment on the question around price and CMS.

Yes, absolutely. So we, along with Nestle have been on a journey in terms of our considerations around price and arriving at our decision that really began on the back of the receipt of the ECOSPOR data a few years ago. And we considered a number of factors when making this decision. First of all, the innovation that VOWST is bringing to the space, right, this is the first approved oral microbiota based therapeutic that provides a robust efficacy profile was demonstrated in our trials and in a well-tolerated 3-day oral regimen that a patient can take in their own home without additional costly procedures. So we feel like we're bringing enormous value to all of the stakeholders across the chain. And this decision is a result of extensive engagement with all of those stakeholders. And I guess the final comment is the price is designed to facilitate access not only across the different payer groups, and you may recall that over half of our patients are commercial patients, but also across the groups that are covered by our broad label, including those with first recurrent. So we're very confident in our decision. I guess the final comment I'll make is that because access is so important to us, we're also providing a robust suite of patient assistance programs, both in terms of treatment support as well as financial assistance via the VOWST Voyage program that will be managed by Nestle.

And we take our next question from Ted Tenthoff with Piper Sandler.

Great. Congratulations. I know how long and hard this has been and is a great day for Seres and Nestle. I wanted to start, did I hear Terri mention that the supply of VOWST would begin in June. Is that the planning for the launch? Or is that something I misheard. And also, do you have plans to profile this approval at upcoming DDW in Chicago, I think, in just a couple of weeks here.

So Ted, thanks for the question. So June is correct. That is our plan and target. And maybe Lisa might be able to comment on plans for DDW.

We will be at DDW in force, both as Seres and as Nestle. So we have planned engagements as well as product theater at CME events. So we will be there.

Great. And it will be a great event for you guys. So sincere congratulations.

And we take our next question from John Newman with Canaccord.

Let me add my congratulations as well. Really great execution from the study and the regulatory side to get the approval. Just 2 quick questions. The first one is I'm wondering how we should be thinking about formulary uptake mainly on the commercial side. I know that the hospital side will take a bit more time. But wondering a formulary uptake will be kind of a factor early in the launch. And then the second question is, I'm curious if yourself or Nestle has any plans for DTC here in the future.

Terri, why don't you take the first one?

So in terms of payer uptake, we anticipate that VOWST will be subject to the very typical payer review processes that all new medicines undergo until each payer does undertake their review and write their policies, VOWST will be available to patients and physicians via a medical exception process. So it's not that we won't see any utilization out of the gate. But these days, you have to get through that new-to-market block period, achieve your coverage and go from there. So we're estimating, as you can see on the one slide, Slide 20, we've got about a 6- to 12-month period of getting through that. We think we're well positioned because we actually deployed the Nestle field team, you may recall, in April of last year. So they've been out there for a year educating and engaging payers. So a plan to go on day one now and progress those efforts.

And then John, I think in Terri's comments, you talked about the unique capabilities that Nestle brings in terms of digital, but maybe you can comment on the second part of the question, too.

Sure. I think the patient is definitely a group that we want to engage. They've told us over time that -- and you might imagine from Lisa's remarks in terms of the patient experience, these patients are very motivated to find out what is going on with themselves and how they can get better quickly. So they are online, they are searching for information and our job is to be there when they're looking, and we are up to the task working with Nestle.

And we take our next question from Tessa Romero with JPMorgan.

I extend my congratulations on the milestone for Seres and for patients as well here. So first one from us is a little bit of a clarifying question. Did I hear correctly that you think you might have coverage for the top 3 PBMs in the first kind of 6-to 12-months post launch? And if this is the case, what's the right way to think about sales trajectory in 2023 and 2024 for VOWST kind of broadly across the population underneath the label?

I appreciate the question, and maybe I'll ask Terri to comment.

Sure. So certainly, the 3 largest PBMs will provide access to the vast majority of the commercial patients. So they are absolutely a priority for us in terms of payer engagement. The payer field team has obviously met with these 3 large customers during the pre-approval information exchange period, and we'll actively engage them again post approval. So yes, we do estimate that we will have outcomes from those engagements in the first 6-to 12-months. along with the vast majority of other influential commercial health plans and Part D plans. So I think that's the first question. The second question, more generally around trajectory. The 3 areas where we'll really be focused that will govern that is the pay review process that I just spoke about but also our need to educate physicians about a transformational way with an entirely new modality of treating patients. So there's an education process. And then finally, I've referenced in previous calls, this segment that I call the hospital, the home segment of patients, where these patients are beginning their treatment for recurrent C. diff in the hospital because their symptoms are so severe but once the antibiotic regimens start to take hold and relieve those symptoms, they're subsequently discharged to finish the antibiotic regimen. These patients would ideally receive a prescription for VOWST at discharge along with the continuation of their antibiotic regimen and take VOWST in the outpatient setting on completion of the antibiotics. So those are sort of the 3 areas. So we have work to do with the hospital team in the hospitals in terms of smoothing that discharge process and ensuring VOWST is consistently available for patients that need them coming out of the hospital. So those are the 3 areas we're focused out of the gate to govern the ramp.

And we take our next question from Chris Shibutani with Goldman Sachs.

This is Stephen on for Chris. I'll pass along my congratulations to the team. So it's a big milestone. I had a question on the label. So I noticed that it refers to the mechanism of VOWST not being established. I'm just curious if that was something proposed by your team or the FDA? And then how you think about not having a known mechanism, do you feel that will impact physicians' view of the product at all?

So Stephen, thank you for the question. So I will ask Matt to comment on the mechanism. And then I think you asked about the commercial implications or potential commercial implications and I'll ask Terri to comment on that.

Yes. So while antibiotics around a necessary part -- are a necessary part of recurrent CDI treatment, they leave patients at risk for future recurrences because they don't restore the functionality of the disruptive microbiome. And we see that as one of the root causes of CDI recurrence. So [ Bell ] said, we've talked about the suspension of these Firmicutes bacterial spores that we source from the gastrointestinal microbiome of healthy donors. And we are still in the process of eliciting the specific mechanism of action of VOWST, but you can review our January New England Journal of Medicine paper, where we provide additional context around that. So in that NEJM paper, we report on the kinetics and magnitude of the engraftment of these Firmicutes bacteria as well as the associated functional changes in that disruptive microbiome that are connected to the C. difficile life cycle.

Yes. And I would say the vast majority of physicians who treat these patients really see the problem and solution very simply. The problem they have with this disease is that despite their best efforts, it keeps coming back. It's a very simple problem. With fortunately, today, a very simple solution with very high efficacy in a well-tolerated 3-day oral regimen. So I don't anticipate this label language to impact physician utilization because the product so uniquely sits their #1 unmet need.

And we take our question from Keay Nakae with Chardan.

A question for Terri. Maybe just digging deeper on your response to the earlier question about physician uptake. In your assessment, with -- how much do they differentiate between the first recurrence and second recurrence appreciating the fact of dysbiosis is implicated in both.

It's a great question. And I would refer you actually back to our December investor event as well where you can hear Dr. Carl Crawford point of view on that, and there's a slide in there that shows a fork in the road. I think we've utilize that visual in our current deck as well. But physicians -- it's such a great visual because it shows you how they think of the disease, whereby you have a patient who has primary C. diff infection and some of those patients get better and they leave the physician's office and they never come back. But there is a significant portion of patients who do come back and there's a bit of a reaction from the physician -- the treating physician of, "Oh, no. Now I have one of those" and they recognize that they have a patient who needs microbiome restoration, and it's a different problem that they're now trying to solve. So they really see the recurrent patient as having a singular problem that keeps coming back that they don't -- prior to today, rather, didn't have good tools to address. I hope that makes sense.

And with this, I would like to turn the conference back over to your host today for any additional or closing remarks. Thank you.

Well, thank you, operator, and thanks to everyone for joining this morning's call. We are incredibly excited about the FDA approval of VOWST. We look forward to speaking with you soon in May when we'll share our first quarter 2023 earnings and provide a business update. So thanks again. Have a great morning, and we look forward to connecting soon.

Thank you. That will conclude today's conference call. Thank you for your participation. You may now disconnect.