Good afternoon, everyone. Oh, I have to speak into this. All right, a little tricky. Can you hear me okay? My name is Ted Tenthoff. I'm a Senior Biotech Analyst at Piper Sandler, and I want to thank you for sticking around for our last presenting company of the day, Seres. Before I begin, I'm required to point out certain disclosures regarding the relationship between Piper and Seres that are posted at the back of the room and also at the registration desk. Seres recently sold VOWST for the prevention of recurrent C. difficile infections to Nestlé Health Science and is now focused on developing microbiome therapies to prevent serious infections. These include SER-155 to reduce incidence of GI infection, bacteria, bacteremia, and GvHD in patients undergoing allogeneic hematopoietic stem cell transplant, and also SER-147 for serious bacterial infections in patients with metabolic disease.
Here with us today from the company is Seres' President and CEO, Eric Shaff, also Lisa von Moltke, who's the Chief Medical Officer, Terri Young, who's the Chief Commercial and Strategy Officer, and Marella Thorell, who's the Chief Financial Officer. Thanks all for being with us. So, Eric, maybe you can start off by describing Seres' core microbiome technology.
Sure. And Ted, first, thanks for having us at this year's conference. Thanks to Piper. It's great to be with you and to talk about Seres and the microbiome. And just for background, the microbiome is the ecosystem of microbes in and around your body. At Seres, we're focused on the gut microbiome and specifically the bacteria in your gut microbiome. And we know that the health of the microbiome has profound impact into human health and disruptions to that ecosystem, to the health of that ecosystem, what we call a dysbiosis. Those dysbioses can have a significant impact into diseases like C. diff infection, as we, as you mentioned, with VOWST, but certainly not limited to C. diff infection. And we're exploring additional areas with SER-155 that I hope we'll talk about later today.
But that's the background of what we're hoping to do on behalf of patients.
Great. And maybe you can walk us through your guys' discovery approach and how you design these medicines to address specific therapeutic needs?
Sure. Well, just again for background, the bacteria in your body, you know, they've co-evolved with us for millions of years, and for the last 10+ years, which is a relatively short time frame in comparison, but nevertheless, we've focused on understanding the functional properties of those bacteria, how those strains of bacteria interact with each other, as well as host human tissue, and our focus is repairing that disrupted microbiome or the dysbiosis in the microbiome, and I think the best example of the application of that technology is really the success that we've had with VOWST, so we designed SER-109, what is now VOWST, to be a consortium of bacteria in spore form that is intended to repair that disrupted microbiome, typically disrupted from the use of antibiotics to not bring back the infection. We're focused on C. difficile infection or recurrent C.
Difficile infection, which is a devastating, can often be deadly, infection, bacterial infection. It's an area where companies have for decades tried to innovate on behalf of patients with limited success. With SER-109, what is now VOWST, we created a consortium of bacteria which had approximately 90% effectiveness in reducing the recurrence of C. diff infection in adults. It was well tolerated, and it's delivered in oral form. We know that the application of our technology can help patients in infectious disease, inflammatory diseases, metabolic diseases, even CNS, but we're focused on infection. Now we're moving to adjacencies from C. difficile where we know we can have success, including the SER-155 program, which I hope we'll talk about today.
Yep, we absolutely will. Now, you guys recently sold the remaining commercial rights to VOWST, which you used as sort of your case study to Nestlé. Please remind us the deal terms and what your retained economics are and what's really the impact to the headcount and your burn rate?
Yeah. So incredibly important transaction that we completed earlier this summer. We think it reshapes the company, puts us in the best position possible to support SER-155 and the programs that we hope and expect will happen after SER-155. And maybe I can ask Marella to go through some of the details of the transaction itself.
Sure. So it was, as Eric mentioned, transformative for the company. From a financial standpoint, we're a much leaner organization. We were able to transfer nearly 100 people to Nestlé. So we were very pleased about that. Now we're about a 100-person workforce, lean, mean, and, you know, nimble, importantly. In terms of the economic terms, we got $175 million upfront at closing, less about $20 million for settlement of liabilities. And then in 2025, we're due another $75 million in installment payments that are contingent upon us satisfying a number of different transition services obligations, which we feel, you know, confident are well in our control. And so we'll be transitioning. We are continuing to support a bit of the manufacturing operations while we fully transition those over 2025 to Nestlé. And we'll share in the P&L of the VOWST business through 2025 as well.
And importantly, we retained rights for milestone payments based upon net sales achievements of up to $275 million in milestones over the next 10-year period.
Great. And since I've got you speaking, you also were able to pay off Oaktree debt, which I think was a big important factor of this transaction, and ended the third quarter with cash of somewhere around $67 million. How long does this fund the company, and what does this enable you guys to sort of report out? Well, just how long does it fund the company? And then we'll kind of get into the rest of the pipeline and talk about the upcoming milestones.
Sure. Yep, sounds good. Yeah, that's, you know, very important milestone for us to pay off that debt. Our balance sheet is clean. We've transferred certain leases and other liabilities related to manufacturing. So we are very pleased. And all of those things obviously yield a lower burn rate. So we have cash into the fourth quarter of next year, which is primarily invested in 155 development, and readiness for the next study.
Great. Well, perfect segue. We promised we would get to 155. And you guys just really showed some cool data on this. Before we get to that, how is it designed, mechanistically? And this kind of goes back to what you were talking about before with respect to the discovery efforts to really prevent bacterial infection.
Yeah. So, let me start with what SER-155 is, which is a consortium of bacteria in spore form. Unlike VOWST, which is a donor-derived program, SER-155 is what we call a cultivated program. So instead of sourcing bacteria, we cultivate the strains from our bacterial library. And our view is that the future of our technology and our programs are likely to be those that fall under that cultivated umbrella. As we think about SER-155, maybe I can ask Lisa to talk about the patient journey, the unmet need, and why we think there's an opportunity for SER-155 to help patients.
Absolutely. Please, Lisa.
Sure. So 155 was put into a trial in patients who are undergoing allo-HSCT, as you mentioned. And so these are patients who primarily have hematologic malignancies, have had their disease brought under control so that they can undergo a transplant. And at that point, they receive conditioning chemotherapy to wipe out their bone marrow, which leaves them in a very immunocompromised state. And that same chemotherapy results in destruction of the intestinal lining, for folks. And so it's very easy for whatever bacteria are in the GI tract to translocate, go across the intestinal wall, and cause infections. So these patients are very susceptible to bloodstream infections from bacteria in their GI tract, for really the two to four weeks after they receive their transplant. So 155 is designed actually to hit two of those problems.
The first is to reduce the load of pathogens that are in the GI tract and replace the flora or the bacteria in the GI tract with bacteria that are, as Eric mentioned, commensals that have co-evolved with us and are not pathogenic. SER-155 has also been devised to promote epithelial healing, which means to help repair the barrier there so that whatever is in the GI tract can't translocate. So as a result of SER-155, we would expect to see fewer bacteria translocating and causing bloodstream infections, so fewer bloodstream infections. We would expect to see fewer bacterial products, so fewer incidents of fever during neutropenia, which those products, even if they're not causing infection, can cause.
And as a result of that, as a result of fewer infections and fewer episodes of fever during neutropenia, we would expect to see way less antibiotic use because whether a patient has an infection or just a suspected infection during that period of high risk, they're treated with systemic broad-spectrum antibiotics, because the risk to them is so great. So that is the journey. That is the role for 155. And as you said, we read out some very cool data.
Yeah. Will you walk us through that?
Okay. So we looked at that 30-day window after transplant. We had hoped in our biggest dreams to potentially see a 50% reduction in the bloodstream infection rate. Our data showed a 77% drop in bloodstream infections as verified by blood cultures, positive blood cultures. So a very big drop. It actually, if you were to do statistical testing on it, it's stat sig. We also saw a drop in the incidence of fever during neutropenia. And then not surprisingly, the antibiotic use followed that as well. So nine days on average for a SER-155 patient on antibiotics versus 21 or 22. So a huge difference. So we were very excited about the data. The KOLs are excited about the data.
Lisa, obviously, in these delicate patients, safety is so important.
Absolutely.
What did you see from a safety side?
Yeah, absolutely. Thank you for bringing that up. It wasn't a given that we thought, you know, you can use a live bacterial therapeutic in these patients, even though the bacteria are, as we said, commensals. But the safety profile was very good. Patients tolerated the therapy. We saw no infections with any 155 species. And this is in keeping with what we've seen across the platform, that these bacterial therapies are, because of how they're engineered, well tolerated by patients.
Now, interestingly, there were cases of C. difficile infection.
Yes.
Do you think this was because of the antibiotic utilization that they were experiencing? And it was slightly higher, I think, with 155, but these are pretty small numbers. So I'm not sure how much we should read into that.
Yes, they are very small numbers, and so we looked at them at the arms as essentially equivalent. There was extensive antibiotic use, not only in the treatment of the bloodstream infections, but all the patients, 100%, were on prophylaxis, going into the study. The other thing to keep in mind is that we did not prescribe how C. diff should be diagnosed, and we know from our work in VOWST that that makes a very big difference, so if patients are only tested via a PCR test, they'll pick up a lot of colonization.
You know, silly question, but does the use of antibiotics risk the engraftment or the efficacy of 155?
Shall I take that?
Sure.
Yeah. Well, we were. That was one of the things we weren't sure of. And so, even though we had data that suggested that the primary antibiotics used in this patient population, particularly for prophylaxis, was something that our bacteria could tolerate, we wanted to see that the drug actually engrafted, and it did.
Yeah. That's great, and then what are our next steps for 155?
Yeah. So we are, and we've said that we are, applying for breakthrough designation as well as a qualified infectious disease designation from the FDA. We have also said that we expect to be hearing very soon, by the end of this year, on both of those. Regardless of how those turn out, we would be expecting to meet with the FDA, in Q1, either for a breakthrough meeting or an end-of-phase one meeting to talk about the next trial. The next trial could be either a more standard, traditional phase two, or potentially a phase two, three single pivotal trial, which we think, if very statistically persuasive, i.e., very positive, could serve as the basis for BLA application because of the fact that this is a high-risk patient population with unmet need.
And.
We don't.
Sorry.
Just to add to that, we are actively preparing for both of those scenarios. So.
Yeah.
Some of the long lead time items that are required to put ourselves in the position to move, such as engaging with the CRO, thinking about site selection, manufacturing clinical product for the next study, those are activities that are underway, and we don't get ahead of the FDA when we hear what their views are on our goals and our aims, then we'll find the right next step.
Great. And Terri, maybe you can lay out the commercial opportunity and how you're thinking about pricing 155 in this indication.
Sure. I'm happy to. We'll start with the population size. It's estimated at 40,000 patients annually, globally. And this is a disease that's tracked. It, the care is delivered at very large transplant centers across the globe, so it's very easy to track and report these cases, so significant population there. And, you know, for us, allo was just the beginning. Physicians will tee up. You know, they're very excited about the profile of 155, and I'll get back to that in a minute. But they immediately, when they understand the biology, they say, "Gosh, if that is an amazing tool, I could use that tool here and here and here in these adjacent populations, so moving to autologous, for example, would more than double the patient potential.
And then, if you move broader into cancer neutropenia, you're talking an additional, incremental couple hundred thousand patients there. So we feel very good about the opportunity from a numbers standpoint. So then, let's think about well, how would this product and to what extent would it be utilized. Lisa talked about the unmet need and how standard of care today, which is primarily antibiotic prophylaxis, is not serving patients and physicians well or the healthcare system. And you can actually see that in the results of our trial in the placebo arm, and how much better SER-155 performed. So standard of care not serving patients. SER-155, we had a 77% relative risk reduction in this study. Physicians have told us that if you can just cut the infection rate in half, that is a transformative product.
And the hem/onc, who are really the lead caregiver and table pounder, and for this patient population in terms of treating them and leading the care team, they would move very quickly, they've told us, to add this to standard treatment protocols. And then, of course, once it's added to a standard protocol at an institution, it's used very broadly, you know, as soon as that addition happens. So we expect very broad utilization, driven by that level of unmet need and the robust profile that we expect to continue to document, for SER-155. These patients are very costly. Stem cell, stem cell transplants run about $400,000 per patient on an annual basis. And when they get an infection, it's an incremental roughly 200.
So, you know, infections are definitely something that you want to cut in half if you're a hospital, if you're a health plan, if you're a PBM. So, you know, that's a very nice band to play with in terms of pricing, that 200,000. We have, we're planning to have a number needed to treat of five. So, you know, I think we have a very nice premium pricing corridor there. There's a Merck product that's been approved since 2017 that prevents viral infections. And, you know, that's a product that achieved premium pricing as well. I'm hearing from physicians they're not seeing any access issues. They're starting to use that product broadly. And that's for a single virus. SER-155 works across the different bad pathogens.
Now, switching gears just a little bit, so really exciting opportunity here. We'll hear more about SER-155 next year and sort of what the plans are and sort of how you look forward to taking this forward, not just in allo but maybe in other indications as well. One of the other programs is SER-147 to reduce the incidence of bacterial infections and metabolic disease, including chronic liver disease. Maybe you can describe this program and really how and where you envision developing it.
Sure. So it's SER-147, which is, we think, the next program in line after SER-155. And similar concept, Ted, where, you know, medically vulnerable patient populations where we're hoping to achieve a couple of mechanistic goals, decrease pathogens and infections from overgrowth of pathogens, as well as protecting gut barrier integrity. But maybe Lisa can comment again on the medical application of SER-147, what we're hoping to do for patients with the unmet need, and we can talk further.
Yeah. This group of patients, in particular those with what we call decompensated cirrhosis, are very sensitive and very susceptible to bacterial infections and can get very ill very quickly. In addition to having potentially bacteria in their bloodstream, they can get bacteria that infect and go directly into fluid in their abdomen in something called spontaneous bacterial peritonitis, and which can be lethal very quickly, so 147 is potentially a drug that, as Eric mentioned, could work at the level of reducing pathogens in the GI tract, as well as potentially addressing this patient population's problem with barrier, which is not caused by chemotherapy, it's caused by their disease, but yet again, we've got a patient population with a leaky GI tract.
Great, and just to kind of wrap up in the time we have left, so what are the milestones that you guys are expecting for next year?
Sure. So I can start, and then Marella can help. But, you know, we are continuing to move forward with SER-155. We were really pleased with the data that we had from the 1b study that we put out in September. And we're actively working towards the next study, whether that next study is a phase two or a pivotal study. And the FDA will opine on that. But, as Lisa mentioned, we've applied for breakthrough designation. We expect to hear back by year-end, QIDP as well. We expect to have an end-of-phase one meeting with FDA or a breakthrough meeting in the first quarter of next year to finalize the path forward. And each of those are opportunities, we think, to provide greater direction on where we're going with SER-155.
I would also note that we've said, we're exploring partnership for SER-155. If there are ways in which we can work with other parties that allow us to accelerate the development of the program, not just capital, but know-how, expertise, perhaps, clinical, and regulatory know-how, ex-U.S., we do think the next study will be an international study. Those are dimensions that we're exploring as well. But maybe Marella, can you comment if I missed something?
Sure. Well, certainly the achievement of the installment payments out of the Nestlé transaction, again, we feel confident, but those will be important achievements in the first half of next year, in addition to, you know, providing a bit more clarity, as Eric said, on our next study design.
Excellent. Well, thank you so much. And I appreciate you being with us. And thanks, everybody, for joining us for day one. Be sure to come back for day two of the conference tomorrow.
Thanks, Ted.
Thank you.
Thank you.
Thank you, Ann.