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Edited Transcript of MCRB earnings conference call or presentation 6-Mar-19 1:30pm GMT

Q4 2018 Seres Therapeutics Inc Earnings Call

Cambridge Mar 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Seres Therapeutics Inc earnings conference call or presentation Wednesday, March 6, 2019 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Carlo Tanzi

Seres Therapeutics, Inc. - VP of IR & Corporate Communications

* Eric D. Shaff

Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director

* Kevin J. Horgan

Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer

* Matthew R. Henn

Seres Therapeutics, Inc. - Executive VP & Chief Scientific Officer

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Conference Call Participants

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* John Lawrence Newman

Canaccord Genuity Limited, Research Division - Principal & Senior Healthcare Analyst

* Mark Alan Breidenbach

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

* Pamela Ann Barendt

Cowen and Company, LLC, Research Division - Associate

* Taylor Josephine Feehley

Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Biotechnology and Pharmaceuticals

* Vernon Tolentino Bernardino

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the Seres Therapeutics Conference Call. As a reminder, this conference is being recorded and will be available on Seres' website for replay. And I would now like to introduce your host for today's call, Dr. Carlo Tanzi, Vice President, Investor Relations and Corporate Communications. Please go ahead.

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Carlo Tanzi, Seres Therapeutics, Inc. - VP of IR & Corporate Communications [2]

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Thank you, Josh, and good morning. A press release with the company's fourth quarter and full year 2018 financial results and a business update became available at 7:00 a.m. Eastern Time this morning and can be found on the Investors and Media section of the company's website.

I'd like to remind you that we'll be making forward-looking statements relating to our development plans; the impact of our recent corporate changes; the timing of the ECOSPOR III study and its ability to support approval; the promise and potential impact of any of our microbiome therapeutics or clinical trial data; the expected regulatory requirements for the SER-287 Phase IIb study; and the sufficiency of cash to support operations. Actual results may differ materially. Additionally, these statements are subject to certain risks and uncertainties, which are discussed under the Risk Factors section of our recent SEC filings. Any forward-looking statements made on today's call represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so.

On today's call, I'm joined by Eric Shaff, Seres' President and CEO; Dr. Kevin Horgan, our Chief Medical Officer; and Dr. Matt Henn, our Chief Scientific Officer. Eric, Kevin and Matt have prepared remarks, and will be available for the Q&A portion of this morning's call. With that, I'll pass the call to Eric.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [3]

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Thanks, Carlo, and good morning, everyone. The last several months have been a period of corporate change for Seres, including focusing our efforts within the company's pipeline, reducing our cash burn by streamlining our workforce and refining our strategy. This also includes my own appointment to the President and CEO role. I've been with Seres for over 4 years, initially as Chief Financial Officer and more recently as Chief Operating Officer. I'm excited and honored with the opportunity to lead the company forward. I deeply believe in the potential of microbiome therapeutics to transform key areas of medicine, and given Seres' substantial scientific, clinical and manufacturing expertise, the company is well positioned to pioneer this effort.

I'll begin by reviewing our recent progress as well as our refocused corporate strategy. I will ask Kevin to discuss our late-stage clinical programs, SER-109 for recurrent C. diff infection and SER-287 for ulcerative colitis. And I will ask Matt to review our immuno-oncology efforts, including the recently initiated SER-401 Phase Ib study and give a brief update on our SER-301 program.

Given my history with Seres, I took the CEO role with substantial knowledge of the company. I also entered into the role with the specific intention to conduct a fresh and objective assessment of the company's programs, strategy and operations. My intention was and remains to take whatever actions are required to best position the company to advance our development programs, serve patients and create value for shareholders. Following the initial completion of this assessment, and in close consultation with our Board, last month we implemented a number of important corporate changes. These include actions to reduce the company's cost structure and extend our operating runway. We also refocused the company's R&D pipeline and strategy. After a comprehensive evaluation of each clinical and preclinical program's scientific data and potential to transform patient care, we made the determination to focus our resources on a limited number of our highest priority programs.

Our strategy today is clear and can be stated as a two-pronged approach. First, we are focused on achieving clinical readouts for our 3 highest priority clinical studies. These are: SER-287 for ulcerative colitis; SER-109 for recurrent C. diff infection; and SER-401 for metastatic melanoma. Second, we are focused on advancing our next-generation rationally designed fermented microbiome therapeutic capabilities with SER-301 for ulcerative colitis being our lead program. With each of these programs, we will concentrate on judiciously deploying company resources to reach meaningful clinical results as quickly as possible. There are a number of reasons behind our enthusiasm and renewed energy. Our focused portfolio includes programs that are grounded in compelling scientific and clinical data, and we are optimistic about each program's clinical promise and considerable commercial potential.

Finally, Seres has developed and continues to strengthen what we believe are field-leading capabilities in drug discovery, manufacturing and clinical development. Stepping into a new modality, we strongly believe these differentiated capabilities have and will yield insights, learnings and understandings, that ultimately results in a greater probability of success. With these competencies, we believe we're uniquely well positioned to continue to successfully validate microbiome therapeutics in the clinic. Looking ahead, we look forward to a period with multiple opportunities to achieve significant milestones for the company, for shareholders and for patients. I'll now pass the call over to Kevin to further discuss our late-stage clinical pipeline.

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [4]

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Thank you, Eric. I'm delighted to have the opportunity to review the late-stage clinical pipeline from my perspective as Chief Medical Officer, having joined the company in October 2018. Seres is developing new microbiome-based therapeutics for serious human diseases, where dysbiosis of the gastrointestinal microbiome has a central role. Our drug candidates are comprised of consortia of live bacteria that are designed to modulate the human gastrointestinal microbiome, and as a result, impacts downstream biological processes and address various disease states. Through this approach, we are working to develop an entirely novel treatment modality that holds great promise for inflammatory and immunological conditions, infectious diseases as well as other diseases, such as cancer.

I'll begin with SER-287 for ulcerative colitis, by summarizing the evidence that led to the exploration of microbiome therapeutics in this indication. First, patients with ulcerative colitis have been identified as having dysbiotic microbiome. And a body of preclinical research suggests that these bacterial imbalances and specifically metabolites produced by certain bacteria may trigger and amplify inflammation. In addition, several published placebo-controlled proof-of-concept studies in ulcerative colitis have reported that fecal microbiota transfer can result in clinical remission.

SER-287 is an orally administered biologically sourced drug candidate comprised of commensal bacterial spores derived from the healthy human gastrointestinal tract. Our therapeutic objective with SER-287 is to induce remission of ulcerative colitis subjects by engrafting commensal bacterial species that promote anti-inflammatory functional responses, enhance integrity of the gut barrier and further displace the proinflammatory bacterial species. Our SER-287 Phase Ib study demonstrated a statistically significant difference in clinical remission with 40% of patients treated with vancomycin followed by daily SER-287 for 8 weeks remitted, compared to none in the placebo group. This clinical outcome was accompanied by microbiome, metabolite and transcriptomic data consistent with a significant therapeutic effect.

It is important to note that clinical remission is a stringent criterion, which is recommended as the primary endpoint measure by the FDA 2016 guidance. Each subject must achieve both endoscopic remission and symptomatic remission. Based on these compelling data, in December, we initiated our SER-287 Phase IIb clinical study. Notably, we've discussed our development plan with the FDA, and based on written feedback, we expect that with positive results, this Phase IIb study could serve as 1 of 2 pivotal studies to support product registration for ulcerative colitis.

Our SER-287 Phase IIb study is a randomized, placebo-controlled 3-arm induction trial in approximately 200 patients with mild-to-moderate ulcerative colitis who are failing their current therapies. In Arm A, patients receive vancomycin pretreatment followed by 10 weeks of the same high-dose daily regimen used in the most efficacious arm of the Phase Ib trial. In Arm B, patients also receive vancomycin pretreatment followed by 2 weeks of high-dose SER-287 and then 8 weeks of a lower dose. Study Arm C patients receive placebo.

Consistent with the most current FDA guidance, the primary endpoint is clinical remission, which we will evaluate at 10 weeks. We will also evaluate various secondary endpoints, including endoscopic improvement and histological mucosal healing, where we observed encouraging signals in our Phase Ib study.

The Phase IIb study is designed to primarily evaluate induction dosing. However, we are also exploring longer-term maintenance dosing. In the Phase Ib study, we observed that SER-287 engraftment was durable for at least 1 month after the completion of dosing. And we will seek to better understand if the use of a living drug could result in sustained clinical benefit, perhaps lasting well beyond the treatment period. The SER-287 IIb study initiated enrollment in December and we are very pleased with progress to date.

I'll now turn to the SER-109 ECOSPOR III Phase III program. ECOSPOR III is a randomized placebo-controlled study designed to enroll approximately 320 patients. SER-109 is designed to restore the health and diversity of the microbiome, resulting in pathogen resistance that will reduce the rate of C. diff infection recurrence. All ECOSPOR III study subjects are treated with standard of care antibiotics to address the qualifying acute C. diff infection, and subjects then receive either SER-109 or placebo. The primary endpoint will compare the C. diff recurrence rate in subjects who receive SER-109 versus placebo at up to 8 weeks after dosing.

Based on the prior completed Ib and Phase II studies, we obtained several important learnings that we have applied to ECOSPOR III. The diagnosis of recurrent C. diff infection, both at study entry and for primary endpoint analysis is confirmed by C. diff cytotoxin assays. We believe that use of C. diff cytotoxin assays ensures that patients entering the study are truly experiencing an active C. diff recurrence. We also believe that use of the C. diff cytotoxin assay will increase the accuracy of in-study recurrence diagnosis for both subjects in the treatment and placebo arms.

I will point out that in our current study, approximately 1/3 of subjects who failed screening were negative because of a negative toxin test. Patients in the ECOSPOR III SER-109 arm receive a total treatment dose that's approximately tenfold higher than the SER-109 dose used in the prior Phase II study. The dose of SER-109 in ECOSPOR III is administered over 3 consecutive days. We expect, based on our previous microbiome data sets, that administration of SER-109 at this higher dose and over multiple days will support more rapid engraftment of SER-109 after antibiotic therapy, thereby reducing the risk of C. diff recurrence.

Study enrollment is ongoing at dozens of sites across the U.S. and Canada. However, as we have previously noted, we've experienced some headwinds to enrollment. We largely attribute this to the widespread use of unapproved fecal microbiota transplantation for recurrent C. diff infection. To expedite enrollment, we continue to review all aspects of study operations and have taken a number of tactical actions. In January, with the approval of the FDA, we also implemented a protocol change to allow patients recurring prior to the 8-week primary endpoint assessment to obtain open-label SER-109 immediately, rather than having to wait until the end of the 8-week endpoint. We anticipate that this change will make the study more appealing to patients, potentially increasing enrollment. In addition, we're also actively evaluating a number of structural study changes, all with the goal of expediting readout timing, while taking into consideration the need to maintain the scientific and statistical validity of the study.

I'll now pass the call to Matt to discuss oncology-focused R&D efforts and our SER-301 program.

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Matthew R. Henn, Seres Therapeutics, Inc. - Executive VP & Chief Scientific Officer [5]

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Thank you, Kevin. Over my 6-plus year tenure at the company, there have been significant advances in the scientific community's understanding of how the microbiome can impact human health and disease through modulation of the inflammatory and immunological state of individuals. Our reverse translation microbiome therapeutics platform and insights from pharmacokinetic and pharmacodynamic assessments of our placebo-controlled clinical trials have yielded insights into the specific mechanisms by which microbes can impact human subjects. We are leveraging these insights in our preclinical discovery and development efforts.

Based on several lines of preclinical and early clinical evidence, we believe that microbiome therapeutics could have an important role in influencing response to checkpoint inhibitor therapy for cancer. Let me summarize some of the key data sets from our labs as well as published data from other groups.

Several groups have demonstrated in various cancer animal models how differences in the overall diversity of gut microbes, and further how specific gut bacteria in these models can improve response to PD-1 blockade and anti-CTL-4 treatment. In animal models, the ability to modulate response to checkpoint inhibitor treatments has been demonstrated using fecal microbiota transplants. Fecal microbiota prepared from checkpoint inhibitor responsive mice or humans, can confer efficacy to nonresponsive mice. Lastly, these general findings have been extended to human subjects. In the settings of metastatic melanoma, lung and kidney cancer, differences in the diversity of gastrointestinal microbes have been associated with differences in subjects' response to checkpoint inhibitors.

Turning to our lead immuno-oncology SER-401, a donor-derived microbiome therapy designed to mimic the bacterial signature found in those cancer patients who have a robust response to anti-PD-1 therapy. SER-401 is designed to modify the cancer immune set point and meaningfully improve patient's response to checkpoint inhibitor therapy. The scientific basis for SER-401 is supported by published findings from our collaborator, Dr. Jennifer Wargo of MD Anderson, indicating that a specific set of bacteria in the gastrointestinal microbiome can have an important impact on the immunological response to checkpoint inhibitor therapy. Analyses of additional human data sets and our preclinical research efforts have extended these findings, and we continue to work to refine the microbiome signature associated with response and delineate at a mechanistic level, how specific bacterial species impact the response to checkpoint inhibitors.

Our preclinical studies to date support a role of specific bacterial species in antitumor responses to anti-PD-1 therapy and, as an example, impact the microbiome -- impacts of the microbiome on specific T cell classes, including CD8-positive T cells. We recently initiated a randomized placebo-controlled SER-401 Phase Ib study in patients with metastatic melanoma where all subjects receive nivolumab or an FDA approved anti-PD-1 therapy. Patients are randomized at a 2:1 ratio to either SER-401 or placebo. The study will evaluate safety as a primary endpoint and explore the correlation of microbiome biomarkers of response to various clinical and immunological outcome measures. This trial is being conducted in collaboration with the Parker Institute for Cancer Immunotherapy and MD Anderson Cancer Center.

We continue to advance our SER-301 program, a rationally designed fermented microbiome therapeutic for the treatment of ulcerative colitis. We have incorporated biological insights from our SER-287, 109 and 262 clinical studies in the drug's design. As examples, we have utilized key learnings from across these studies, such as the dynamics of engraftment of specific bacterial species, species that are associated with clinical remission and endoscopic improvement and species that produce metabolites that can modulate functional targets of interest and that correlate with clinical efficacy in UC subjects as we advance this program.

I'll now pass the call back to Eric to cover the financials and provide closing comments.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [6]

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Thanks, Matt. Seres reported a net loss of $98.9 million for the full year 2018 as compared to a net loss of $89.4 million for the prior year. Seres reported a net loss of $21.3 million for the fourth quarter of 2018 as compared to a net loss of $29 million for the same period in 2017. The fourth quarter net loss was driven primarily by clinical and development expenses, personnel expenses and ongoing development of the company's microbiome therapeutics platform. The fourth quarter net loss figure was inclusive of $10.6 million in recognized revenue associated primarily with the company's collaboration with Nestlé Health Science.

R&D expenses for the fourth quarter 2018 were $24.8 million as compared to $24 million for the same period in 2017. G&A expenses for the fourth quarter were $7.5 million as compared to $8.8 million for the same period in the prior year. The increase in the company's cash, cash equivalents and investments balance during the quarter was $12.9 million. Seres ended the fourth quarter with approximately $85.8 million in cash, cash equivalents and investments. The increase in cash in Q4 was inclusive of $40 million in milestones received under the company's collaboration with Nestlé Health Science. Revenue related to the Q4 milestones will be recognized over time based on progress achieved against the collaboration with Nestlé Health Science. Based on the company's current operating plan, cash resources are expected to fund operating expenses and CapEx requirements, excluding net cash flows from future BD activities or potential incoming milestone payments into the fourth quarter of this year.

Now before I move to -- before we move to Q&A, I just want to spend a moment recapping this past period as well as looking ahead. As you have heard, we have refocused the company on a select number of what we believe are highly exciting programs with opportunity to provide meaningful patient benefit and create substantial value. As a company operating principal, we are focused on execution and driving these programs forward as quickly as possible. Our eye is on clinical readouts for each program and ensuring that we have the team, the capabilities in place to expeditiously drive towards each of these events. We are also fortunate to have the support of a strong corporate partner in Nestlé.

We would also like to be as clear as possible based on what we know today regarding the operational status of our pipeline. Based on current projections, we expect to complete the enrollment of the SER-287 Phase IIb study by mid-2020, and we expect to obtain SER-401 Phase Ib study results in 2020. We continue to recruit the SER-109 Phase III study, and as Kevin mentioned, we are working diligently to complete our assessment of any changes to that study, and we will provide you with an update as soon as possible.

Operator, let's open the line now for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Mark Breidenbach of Oppenheimer & Co.

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Mark Alan Breidenbach, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [2]

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Maybe the first one for Kevin. I think I heard you mention that 1/3 of subjects in ECOSPOR III who are failing their screening for entry into the study are due to testing negative for cytotoxins. First of all, can you give us a sense for what the other 2/3 are largely failing screening for? And second of all, I'm wondering if the high rate of negative tests for cytotoxins are implying that the incidence of recurrent CDI infection are actually -- may be artificially higher than what we commonly see in the literature?

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [3]

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So with respect to the reasons for screening, it's really pretty -- it's pretty remarkable how the only explanation that we see frequently is toxin negativity. If you look at the entire spectrum of the other reasons, it's individual, like 1 or 2 patients -- 1 or 2 subjects failing for a complete variety of reasons. There's no other dominant kind of factor that stands out.

And with regard to your second question, I think, it -- our sense is based on the science and the sensitivity and specificity of toxin to define real disease versus PCR approaches, I think, the key thing is that we're confident we're accurately diagnosing recurrent disease. And inevitably, I think that there is -- that there has to be a significant amount of overdiagnosis of recurrent disease when toxin -- when patients are assessed using other tests -- PCR tests.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [4]

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Yes. Mark, this is Eric. Maybe I'll just add to Kevin's answer, which I agree with. We believe that C. diff is obviously an incredibly important and difficult issue, health care issue, and in particular, when you're looking at the recurrent patient population as we are with SER-109, a high unmet medical need, orphan disease, and we really believe that solutions in this space today are wholly inadequate. And the one thing I would add to Kevin's comment is, we believe that we're really leading the field by using the cytotoxin approach as opposed to PCR. And as people throw around -- numbers around potential efficacy for other approaches, you really have to question whether those assessments are accurate, unless they're using a cytotoxin, which, in many cases, they are not. So I just wanted to add that.

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Mark Alan Breidenbach, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [5]

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Okay. That's helpful. One last one for me. I can't help but notice that the design of the SER-401 trial has been scaled back a little bit from what was originally proposed last year. I seem to remember, it used to be a 3-arm trial that was targeting to enroll 60 patients and it included an arm that was comparing against a fecal transplant of some sort. Can you just comment on the changes, why are we going down to a 2-arm design with 30 patients?

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [6]

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Yes. Mark, this is Eric, I'll ask Kevin to answer that.

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [7]

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Yes, I think it just reflects -- I mean, the fundamental design of the program is unchanged. It's that the -- the component of the program that is actually active at the moment is the component evaluating SER-401.

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Mark Alan Breidenbach, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [8]

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Okay. But in terms of -- does that imply we might see another arm added in the future that would include it?

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [9]

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Yes, yes, absolutely. We're committed to conducting the FMT arm. It just happens to be that enrollment right at the moment is in the 401 component of the study.

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Operator [10]

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And our next question comes from Chris Shibutani of Cowen.

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Pamela Ann Barendt, Cowen and Company, LLC, Research Division - Associate [11]

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This is Pam on for Chris. I had a couple of questions. First, on 109, you mentioned potential structural study changes. Could you elaborate on this a little bit -- more sites, more investigators?

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [12]

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Yes, thanks for the question. So there's really 2 major approaches for how we're thinking about 109. The first is, it's from an operational perspective. As we've commented before, we're looking at every lever possible to increase patient enrollment. And we mentioned one of those in our prepared remarks. Kevin mentioned one of those regarding the amendment that the FDA agreed to in patients enrolling directly into the open-label study. But that's one, but certainly not all of the levers that we're looking at. We continue to make sure that no stone is unturned in the clinical operations relating to the study and how quickly we can enroll those patients.

The other component of it is, trial design alternatives. And we've mentioned before, and certainly we continue to look at ways in which we can alter the design of the study and expedite trial results. Certainly, I think you've seen that given the corporate changes that we made shortly after the leadership changes here, we are not afraid to make decisive decisions relating to reaching late-stage clinical endpoints, and that certainly will be the case here. So if there are additional updates, then we will get back to you with those updates.

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Pamela Ann Barendt, Cowen and Company, LLC, Research Division - Associate [13]

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Very helpful. And if I can ask just one more. On 287, is there any possibility of just 1 pivotal trial or if discussions with the FDA have really moved towards 2 pivotal trials, what would the second trial look like?

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [14]

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Yes, this is Eric. I'll start by saying, we don't disclose the kind of the day-to-day interactions that we have with the FDA. But our expectation is, as we stand here today, this would be one of -- with compelling results, this would be 1 of 2 pivotal trials. And I'll ask Kevin to add commentary.

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [15]

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Yes. So I agree. I mean, the standard for registration of a novel therapeutic in inflammatory bowel disease in general and ulcerative colitis in particular, would be 2 pivotal trials. As I mentioned, the focus of the current study is an induction study, though we are exploring maintenance regimens. And one of the dividends of the second pivotal trial would be that we would study a specific maintenance regimen in order to obtain a maintenance indication. And it's the development paradigm for drugs for inflammatory bowel disease in general and ulcerative colitis in particular, the 2 pivotal trials required to achieve an indication for induction, whereas only 1 pivotal trial is required to obtain a maintenance indication. And so our program, as currently configured, will directly fulfill those requirements.

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Operator [16]

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And our next question comes from Taylor Feehley of Chardan.

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Taylor Josephine Feehley, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Biotechnology and Pharmaceuticals [17]

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Kevin, I was hoping for a little bit of clarification on the protocol changes you discussed have been implemented. So if I understood correctly, patients who recur ahead of 8 weeks can now roll over to the open-label use of 109? 8 weeks seems to be pretty standard in the field for testing recurrence, but I was wondering about how common is it for patients to recur ahead of that time point. Trying to get a sense of how many patients would fall into this new group.

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [18]

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The timing of recurrence is heavily skewed towards the first few weeks, within the first 14 to 21 days. So no, we haven't modeled this out precisely, but there -- our sense is that there's a substantial number of patients to whom this change would be relevant. And it's notable that our original proposal was that patients would, after they recurred, would be able to go into the open-label extension, and the FDA were quite resistant to that approach. And the reasoning that they had is that they wanted to see patients for the full 8-week period, primarily to assess safety. But, I think it's probably a reflection of the confidence in the safety of our approach that the FDA with -- following our dialogue, has allowed us to make this change and to enable patients to, once they recur to go directly into the open-label extension. And this was something that has resonated with investigators as a potential factor that will help enrollment. And obviously, a backdrop to this whole dialogue that we suspect has informed the FDA's flexibility is the whole fecal microbiota transplant issue.

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Taylor Josephine Feehley, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Biotechnology and Pharmaceuticals [19]

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And I wanted to follow up a little bit on the FMT question. So I was wondering if anyone had comments on the ongoing debate that was highlighted in The New York Times over the weekend. Certain physicians are concerned on cost of an approved medicine relative to FMT. And whether or not regulators are skewed one way or the other towards favoring the 2 tracks. Certainly, you've indicated some of your perception of to regulators but any comments on pricing or other considerations in the debate?

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [20]

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Yes, Taylor, thanks for the question. I would start by saying, I think it's great thing that people are talking about C. diff. I think it's a great thing. This is a serious disease, and especially as I mentioned, if you're looking at the recurrent patient segment as we are with SER-109, it's extremely costly to the system and there are just inadequate solutions today for patients in the space. So the question is what's the best way to serve patients, right? And we feel strongly that the best way to serve patients is through well controlled, FDA regulated GMP manufactured clinical studies, right? And the idea of speculating on safety or speculating on efficacy, we think, in the long term, doesn't make sense, certainly in the short term we're for anything that helps patients. But our belief is that with an approved therapy, an approved FDA therapy, unregulated and uncontrolled procedures will go away. So maybe I'll ask Kevin to comment further.

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Kevin J. Horgan, Seres Therapeutics, Inc. - Executive VP & Chief Medical Officer [21]

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Yes. I think that the key thing here is the medical need and providing patients and physicians with data so they can make a really informed decision. And over the last 50 or 60 years, there have been paradigms for the evaluation of therapies to enable patients and physicians to make informed decisions under the auspices of the FDA and other regulatory agencies outside the United States. And that system has worked remarkably well. And it's when there are deviations from those paradigms that, I think, that patients are put at unnecessary risk; and we're very happy with our approach.

We're having -- we're taking things very carefully and rigorously in accordance with the dialogue with the FDA. And we're -- we really think we're pushing the frontiers of science, and I think that is reflected in the topic about the -- using toxin for diagnosis. This is something that's not only helping the design of clinical trials in this space, but this is informing -- should inform clinical practice to optimize outcomes for patients in a very transparent and rigorous way.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [22]

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Thanks for the question, Taylor, and we look forward to participating in the microbiome conference tomorrow.

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Operator [23]

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And our next question comes from John Newman of Canaccord.

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John Lawrence Newman, Canaccord Genuity Limited, Research Division - Principal & Senior Healthcare Analyst [24]

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All my questions have been answered.

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Operator [25]

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And our next question comes from Vernon Bernardino of H.C. Wainwright.

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Vernon Tolentino Bernardino, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [26]

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Congrats on the initiation of SER-401. Just a couple of questions. Regarding structural changes for the ECOSPOR III study, have you seen any positive changes as far as the pace of patient enrollment? And then with

(technical difficulty)

but, I guess also with 109, what have you seen as, perhaps, in your studies coming to perhaps a -- just definition of a mechanism of action for the microbiome approach to these type of diseases? And then lastly, with SER-401, what time frame do you expect to take the measures that you will be looking for in the SER-401 study?

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [27]

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Yes. Vernon, so 3 questions. Maybe I'll take the first one, which is on progress in 109. We have not provided the detail or guidance on enrollment to date. What I can say is that, again, we've looked at every lever possible operationally to try to speed up enrollment, and frankly that also includes Kevin's arrival as our new CMO and taking a fresh look at our clinical operations and ensuring that we're exhaustive in thinking about alternatives. So we do think, as Kevin mentioned in his opening remarks, that the protocol amendment is one example of a way in which we think that there's a possibility of increasing that enrollment, speeding up enrollment, making it more attractive for patients to enter the trial. Your second question related to mechanism, and maybe I'll ask Matt to comment on that one.

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Matthew R. Henn, Seres Therapeutics, Inc. - Executive VP & Chief Scientific Officer [28]

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Yes, no problem. So -- and I think the question was mechanism around both 109 and 287, it was unclear from the question. So I'll address both briefly. So with respect to SER-109 and the mechanisms of action that are important there, we really believe there are 2 primary mechanisms in play. One is the ability of the bacteria in our therapeutic to outcompete C. diff in the gut, and that's done through various different mechanisms, including carbohydrate composition, et cetera. And secondly as well as the ability of SER-109 to change the metabolic profile in these subjects, and we've been able to identify changes in bio acid metabolism that are favorable to competition against C. diff.

With respect to 287, we've been obtaining a lot of very interesting data with respect to metabolites, genetic pathways as we said that are associated with remission and further that we can connect with specific different bacteria. And the key mechanisms of action that we believe are important and are ones in which we are designing SER-301 towards, as an example, is the ability to repair epithelial barrier integrity and basically the use of microbes and the metabolites that they produce to generate such changes and then as well as the ability to tamp down inflammation. And in this particular case, we see the ability of changes in various different inflammatory and immunological pathways that are known for UC as well as others that are not.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [29]

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And Vernon, I think your last question related to timing for 401 and perhaps additional data that we might get from 401. I'd just reiterate that we expect to receive readout in 2020. And we may guide additional detail along the way as we get further in the trial. But, of course, as you know, we just started it. So for now, we'll provide that initial guidance, and we may refine that over time as we've done with other programs in the past.

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Operator [30]

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And that does conclude our Q&A. I would now like to turn the call back over to Seres Therapeutics for any closing remarks.

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Eric D. Shaff, Seres Therapeutics, Inc. - President, CEO, Interim Principal Financial Officer & Director [31]

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So thank you, operator, and thanks for -- to everyone for giving us your time this morning and for your continued interest in Seres Therapeutics. I just want to let you know that we will be attending several upcoming conferences, including the Chardan Microbiome Sciences Medicine Summit tomorrow in New York, Cowen's Health Care Conference in Boston on March 11 and Oppenheimer's Health Care Conference in New York on March 19. So we look forward to connecting with many of you soon. So we'll end today's call, and have a great day. Thank you.

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Operator [32]

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Thank you. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day.