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

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Seres Therapeutic webcast to discuss recent clinical studies results. [Operator Instructions]. It is now my pleasure to turn the call over to Carlo Tanzi, Kendall, Investor Relations. Please go ahead.

Thank you, operator. Earlier today, Seres announced promising results from the investigator-sponsored trial or IST of SER-155 in immune checkpoint inhibitor related andropilatis, or IREC, conducted at Memorial Sloan Kettering Cancer Center or MSK. We have posted slides on the Investors section of the Seres website, which we'll review on today's call. As noted, we will be making forward-looking statements on today's call, including regarding our pipeline, potential applications for our drug candidates, clinical development plans, potential partnerships and financing strategies and other matters which are subject to risks and uncertainties as described in the company's SEC filings and as noted on this slide. Seres undertakes no obligation to update forward-looking statements, except as required by law. Speaking on today's call are Richard Kinder, Executive Chairman and Interim CEO; Dr. Matthew Henn, Seres' President and CFO; and Kelly Brady, EVP and COO; Dr. Jonathan Peled, a bone marrow transplant specialists and cellular therapists at MSK will also join the call. Marella Thorell, EVP and CFO; and Denis Wally, SVP Clinical Development, will be available for Q&A. I'll now pass the call over to Rich.

Good morning. Thank you for joining us. We are excited to report promising new clinical data that we believe expands the opportunity for Seres live biotherapeutics and as a fundamental component of cancer care. Memorial Sloan Kettering Cancer Center, 1 of the world's leading institutions devoted to cancer treatment has worked in collaboration with Seres for over a decade. And this partnership has advanced our understanding of the importance of microbes to human health and importantly, has helped translate these learnings into improved outcomes for oncology patients. I want to thank the patients and the investigators involved in this study for aiding in these efforts. We believe the results of this IST support the potential of SER-155 to provide a differentiated nonimmunosuppressive approach to treat IREC and importantly, to allow cancer patients to remain on their life-saving immune checkpoint inhibitor, which is often discontinued as a result of IREC. With that, I'll turn the call over to Kelly to describe the ICI patient journey and share the study results. Kelly?

Thank you, Rich. Starting on Slide, immune checkpoint inhibitors, commonly known as ICIs are a widely and increasingly used class of cancer therapy because they are effective in a range of solid tumors. ICI's work by interacting with the immune system. The immune system has built-in breaks that prevent immune cells from overreacting. Cancer tumor cells exploit these breaks by expressing various proteins to hide from the immune system. ICIs unmasked the cancer cells so that the immune system is activated and amplified and can recognize and attack cancer tumors. Unfortunately, the immune system activated by ICI can often also attack healthy tissue, including in the gut, leading to a serious side effect called immune checkpoint inhibitor related enterocolitis or IREC, also referred to as immune-mediated colitis. For the patient, IREC typically results in diarrhea, abdominal pain, colitis or inflammation of the intestine and blood and stool and can significantly affect quality of life and, in some cases, progress to costly patient hospitalizations and serious or life-threatening consequences. IREC incidence rates vary by ICI type and regimen, moderate to severe IREC classified as grades to 3 occurs in approximately 25% of all ICI recipients which in the U.S. alone equate to an estimated 75,000 patients or 1/4 of the 300,000 patients estimated to be on ICIs in 2026 and the use of ICIs is growing as the types and stages of cancer, which are eligible for treatment with ICIs is also expanding. Devastatingly, while ICIs work well, guidelines stipulate that patients who are afflicted with moderate to severe IREC must halt their ICI therapy an immunosuppressive corticosteroids. Moving to Slide. This is where SER-155 could potentially fill a significant gap for patients and clinicians in need. There are numerous clinically meaningful toxicities associated with current standard of care immunosuppressives, including systemic immunosuppression, increased infection risk and metabolic complications. Additionally, the immunosuppression may negatively impact the anticancer effect of the ICI therapy and put cancer outcomes at risk for patients. Approximately 40% of these patients do not respond to systemic steroids and require escalation to biologics treatment, which may also be immunosuppressive. This is why clinicians are seeking safe non-immunosuppressive solutions to treat IREC and get their patients back on the drugs to fight their cancer as quickly as possible. SER-155 is an oral treatment designed to repair the mucosal epithelial barrier and reduce the gastrointestinal inflammation, which underpins IREC and which Matt will discuss later and to do so without any negative interference with the immune system. Now that you have the context of the large unmet patient need, on Slide 5, we've summarized key results of the study. First, we saw an impressive 80% immunosuppressive free clinical response rate with 12 of the 15 participants treated with SER-155, achieving at least a 1 grade response in diarrhea, a common measure of IREC severity by day 15. As expected, based on our prior clinical study experience, SER-155 was generally well tolerated with no serious drug-related adverse events. Importantly, we also observed pharmacology results that support the clinical outcomes, notably improved mucosal epithelial barrier function and reduce gut inflammation in a second indication, the first being in the strong study results from our Phase Ib of SER-155 in allo-HCT patients, which you may have previously seen. The design of this study is described on Slide 6. It was an open-label Phase Ib trial conducted by MSK, evaluating SER-155 and 15 participants with Grade 2 or Grade 3 IREC. As a reminder, that is moderate to severe, who had not yet received immunosuppressive therapy for their IREC. MSK is an institution with substantial expertise in managing immune-related gastrointestinal toxicities associated with checkpoint inhibitors. The study's main clinical efficacy assessment was immunosuppressive free clinical response at day 15 defined as at least a 1 grade improvement in diarrhea symptoms without corticosteroid or biologic immunosuppressive therapy. Safety and tolerability were also evaluated dosing of SER-155 was a convenient 2 capsules once a day for 12 consecutive days. As noted on Slide 7, the enrolled population reflected a clinically representative IREC population and included participants with a range of underlying cancers and most at later stages 3 and 4. A wide range of prior ICI treatment regimens, including PD-1 inhibitors, such as KEYTRUDA, OPDIVO, Zini, PD-L1 inhibitors such as Imfinzi, BaventiO, CTLA-4 inhibitors such as YERVOY and Judo and LAG3 inhibitors such as Updualag were represented in this study. Notably, 60% of participants entered the study with debilitating Grade 3 diarrhea, reflecting a severe form of IREC. There was strong compliance with the SER-155 dosing regimen. We will speak about ICI therapy interruption next. As you can see on Slide 8, IREC diarrhea grades range from low grade 1 to moderate to severe grades 2 to 3 to progression to grades 4 to 5 resulting in life-threatening complications or death, respectively. While Grade 1 is managed with only symptomatic care, importantly, as noted previously, the treatment guidelines for Grade 2 or higher dictate halting the patient's ICI therapy. This practice was borne out in the IST as we noted that 14 of 15 study participants were 93% had their ICI therapy interrupted prior to study entry as a result of their IREC. Additionally, a post-top observation in the study found that a portion of participants returned to their ICI therapy through day 43 of the study and Seres expects to analyze ICI administration in a future study. Grade 2 through 4 IREC also require medical intervention with the current standard of care, which is immunosuppressive therapy, such as corticosteroids or biologics. The patients with more severe forms of IREC can require hospitalization, and this can certainly have a significant impact on the patient's quality of life. Digging a bit deeper into the results on Slide 9. As noted earlier, at day 15, the primary endpoint, 80% or 12 of the 15 participants achieved immunosuppressive free clinical response following SER-155 dosing. Further, 33% or 5 of the 15 participants which represents 42% of the 12 responders achieved immunosuppressive free complete clinical remission defined at full resolution of diarrhea symptoms down to grade 0 without immunosuppressive therapy. A few more details worth noting are the speed of response 11 of 12 responders showed improvement by day 8 and the magnitude of response, 8 of 12 responders improved by 2 or more grades by day 15. Slide 10 shows the day 43 clinical results. Importantly, all 12 responders at day 15 remained at the same diarrhea grade or better as of day 43. Five of 15 participants maintained immunosuppressive free response, 2 of whom remained in clinical remission, which is a grade 0 and 3 of whom remained a grade 1. We believe these results are highly encouraging because they suggest that SER-155 improves IREC symptoms without requiring immunosuppression over a period of time. The 7 of 15 remaining day 15 responders maintained their clinical response at day 43. These patients received nonsystemically acting gastrointestinal targeted immunosuppressive for mild residual or moderate recurrent symptoms. Importantly, these data suggest that SER-155 has potential to help patients avoids the use of high-dose systemic corticosteroids and address the unmet medical need in IREC. Turning briefly to safety on Slide 11, SER-155 was well tolerated through day 43. There were no serious adverse events assessed as related to SER-155 and no bloodstream infections were reported. Two participants experienced nonserious adverse events assessed as possibly related to vancomycin and SER-155, and those events were moderate in severity and resolved. In summary, taken together, we believe these clinical and safety results support the potential of SER-155 as a differentiated nonimmunosuppressive therapeutic approach in IREC which could allow patients to remain on their ICI cancer drugs and potentially benefit to a greater degree from the immune therapy. With that, I'll hand the call over to Matt. Matt?

Thank you, Kelly. Moving to Slide 12. In addition to the clinical observations, we were also pleased with the pharmacology and translational results from this study, which provide important biological support for the observed clinical activity of SER-155. . I'll start by explaining more about the functional properties that SER-155 was optimized to target and how the clinical pharmacology results support that is working as intended. Notably, in cancer patients, different stressors, for example, chemotherapy or as in the case of immune checkpoint inhibitor therapy, the activation and amplification of T cells and macrophages can damage the cells that creates the mucosal epithelial barrier in the gastrointestinal tract, and this damage leads to gastrointestinal inflammation and the further exacerbasin of such by various inflammatory cellular products and potentially harmful bacteria present in the gut. In addition, in certain high-risk patient populations, mucosal epithelial barrier compromise can lead to infections. SER-155 is a live biotherapeutic that was designed to prevent the translocation of gastrointestinal pathogens and resulting bloodstream infections in allogeneic hematopoietic stem cell transplant or allo-HSCT patients. Mechanistically, to achieve this, the SER-155 bacterial consortia was optimized to include bacteria that Seres has identified to be potent producers of metabolites that promote mucosal epithelial barrier integrity and that can modulate immune responses without immunosuppression. And in addition, include bacteria that can prevent the colonization of harmful bacterial pathogens in the gut. Importantly, the targets of Series Biotherapeutics are key upstream drivers of inflammatory and immune diseases that existing drugs do not target. In Seres' previous Phase Ib study of SER-155 for the prevention of bloodstream infections in Allo-HSCT patients, biomarker data demonstrated clinical translation on all of the above noted mechanisms of action, including protection and repair the mucosal epithelia barrier and immune modulation linked to anti-inflammatory outcomes. In that study, these pharmacology data supported the observed clinical results, a strong 77% relative risk reduction in bloodstream infections for those participants who received SER-155. Results that led to the FDA granting breakthrough therapy designation to SER-155 and also the acceptance of these study results for publication in Nature Medicine in a coming future issue. MSK was a collaborator on our SER-155 Phase Ib Allo-HSCT study and the results from this study, along with the significant unmet medical need for a new solution in treating IREC motivated the IRAC investigator-sponsored study. Turning to the IREC study pharmacology results on Slide 13 consistent with prior SER-155 studies, the majority of SER-155 strains, colonized and took root in the gut, i.e., engrafted across all patients. The engraftment profile was consistent with what we have previously observed in the ALLO HCT setting. These data support and reinforce robustness and reproducibility of SER-155 pharmacokinetics. Turning to the drug's pharmacodynamics. SER-155 could be a highly differentiated therapeutic option for IREC that addresses current standard of care limitations. The translational analysis from this study support that rationale. At baseline, participants showed evidence of epithelial barrier disruption and severe gastrointestinal inflammation as evidenced in the biomarkers fecal albumin and fecal calprotectin respectively. Fecal albumin is a biomarker that indicates protein leakage from the bloodstream into the gut lumen and provides direct evidence of mucosal epithelial barrier compromise. Fecal calprotectin is a well-established clinical biomarker of immune activation that indicates the presence of activated neutrophils in the intestinal mucosa. At study entry, participants had elevated fecal albumin and calprotectin levels that are characteristic of individuals with colitis. Following SER-155 treatment, both albumin and Calprotectin biomarkers showed early, durable and concordant reductions over time with significant reductions in both measures achieved by day 43 reflecting consistent improvement across 2 mechanistically linked dimensions of IREC disease. These biomarker improvements were directionally consistent with the clinical observations and provide additional support for SER-155 potential biological activity in this disease setting. Importantly, the pharmacological and translational results suggest that SER-155 may act on core disease-relevant biology rather than simply produce a symptomatic effect. As noted on Slide 14, Seres has pioneered a new drug modality and accessed the vast therapeutic potential of microbes. We have a track record of success with achieving FDA licensure of VAT and are advancing innovative technologies as supported by multiple breakthrough therapy designations. More importantly, we view the IRAC study results as supporting the potential of SER-155 and Seres live biotherapeutic technology across diseases characterized by microbiome functional disruption and resulting mucosal epithelia barrier dysfunction and inflammatory dysregulation. We are focused currently as a company on addressing unmet medical needs in oncology and inflammatory and immune diseases, where we think our drugs are uniquely positioned. As noted on Slide 15, mucosal epithelial barrier disruption is increasingly recognized as an important driver across multiple inflammatory immune infectious and oncology-related conditions. By therapeutically modulating the gastrointestinal microenvironment, supporting mucosal healing and reducing inflammatory responses of immune cells, in other words, inducing immune homeostasis rationally designed live biotherapeutics may address clinically meaningful disease biology in ways that are distinct from conventional immunosuppressive therapies. Over time, this biology could have relevance beyond IREC, including in other oncology settings, inflammatory bowel disease, the focus of Seres SER-603 program, infection associated complications and additional inflammatory and immune disorders. In closing, as noted on Slide 16, we believe the results of the investigator-sponsored trial reviewed today are an important milestone for Seres that represent a potentially meaningful opportunity for patients undergoing cancer therapies. Immune checkpoint inhibitor drugs have revolutionized cancer treatment and are sizable, valued at over $50 billion globally in 2025 and growing drug class. Estimates of the annual growth rate of ICIs range from mid- to high double digits over the next 5 to 10 years, driven by broadening eligibility for ICI therapy across multiple cancer types. Earlier intervention and use of ICIs in combination with other cancer therapies and increasing global cancer rates. Unfortunately, many patients develop debilitating immune-related enterocolitis, which the current standard of care does not meet the medical needs and can lead to disruption of life extending cancer treatment. SER-155 could offer a unique solution to IREC with a demonstrated potential to broadly achieve immunosuppressor free treatment and prevent the halting of life-saving cancer therapies. With that, I'll turn the call back to Rich.

Thank you, Matt. As we evaluate next steps in the development of SER-155 for IREC and in our Phase II ready program for LOHCT, we believe this study data will strengthen our ongoing engagement with potential strategic counterparties and financial partners including those interested in finding solutions to both improved outcomes for oncology patients and enhance the use of ICIs as well as those who want to address broader inflammatory and immune diseases. Before we open the line for questions, I would like to introduce Dr. Jonathan Pellet from Memorial Sone Kettering and express my appreciation for the great work he and his colleagues are doing to advance cancer care and improve patient outcomes. Dr. Peled, I know I speak for everyone at Seres and appreciation for you taking the time to join this call.

Thank you very much, Rich. Happy to be here. .

Thank you. Dr. Pellet, I'd like to ask you to comment on MSK's experience with ICIs and IREC and given your experience working with series on clinical studies to share your thoughts on the potential for SER-155 in IRC and beyond.

Sure thing. We've been -- as was mentioned, we've been collaborating for many years working on this. And the gut barrier is really where the microbiome and the immune system meet 1 another with just a single cell layer between them. And this is a really critically important part of the body for human health in cancer treatment in infectious disease and in many other inflammatory diseases but it's really largely inaccessible to many drugs and the drugs that are used often have a lot of side effects. I think that SER-155 as a live bad therapeutic is really novel and its ability and unique in its ability to target and modulate the gut community of bacteria and the biology that's happening in the intestine. And there are really 2 clinical settings where we've seen that we can already make an impact. As your colleagues mentioned, in the prior study that we collaborated on, which was placebo-controlled, we showed that we could reduce the risk of blood stream infections during bone marrow transplantation. And in the current study, we now have this really promising sickle about attenuating the inflammation, the colitis and the diarrhea that can complicate cancer immunotherapy. This as briefly mentioned earlier, but I just want to underline the point that the current standard approach to this application of the cancer therapy, which is steroids, are really an inadequate answer for our patients mostly because of the immunosuppression that they can cause and the risk of infection but also because of the treatment interruptions. So the cancer patients are not only feeling miserable from their diarrhea, but they have to pause their life-saving treatment for their underlying cancer. So the idea that we could administer an optimally designed consortium of bacterial strains that can produce the right blend of metabolites promote the barrier function of the gut outcompete pathogens and potentially reset homeostasis in the gut is really exciting because this can potentially allow our patients to stay on their life-saving cancer treatment and deal with this very serious side effect while avoiding the side effects of the immunosuppression of the steroids. I'll just mention 1 other thing, which is that I think there are a lot of other clinical settings where if we could improve gut barrier function, it could really be transformative even outside of the very specific clinical settings that we've currently studied this drug in together, inflammatory bowel disease, patients in the intensive care unit, the neutropenia that a company is conventional cancer treatment with chemotherapy and cellular therapy to saying just a few, so I think there's enormous potential here.

Thank you, Dr. Peled. We appreciate your thoughts. Operator, we can now open the line for questions.

[Operator Instructions] Our first question comes from the line of John Newman with Canaccord Genuity.

Congrats on really, really interesting data here. It could be a start of a new treatment paradigm to manage this issue. You may have mentioned this on the call, but I'm just curious, in your study, were there any patients that were actually able to resume their immune checkpoint inhibitor therapy during the study.

John, thank you for the question. Yes, as a reminder, and we did mention it that of the 15 patients who enrolled on this study of 15 participants had their immune checkpoint inhibitor interrupted at study entry. Though it was a post-hoc observation, we did observe that a portion of participants we're able to return to their immune checkpoint inhibitor through day 43. And we did not observe that the immune checkpoint inhibitor had an impact on the diarrhea response, either day 15 or day 43 and we will absolutely look at ICI administration and analysis as part of our future study planning.