Q4 2019 Earnings Call
Ladies and gentlemen, thank you for spending by.
Quarterly.
Earnings Conference call at this time, all participants on the listen only mode at the just because presentation they'll be a question answer session. So that's the question. During this session you want me to press the star tend to one key on you touched on telephone.
Please be advised that today's conference maybe recorded happy with copper assistance. Please press Star then Sam.
The conference over to Speaker today, [laughter] Carlo Tanzi head of Investor Relations. Please go ahead Sir.
Thank you love Yeah, good morning, everyone.
A press release with the company's fourth quarter 2019 financial results in a business update became available at seven am Eastern time. This morning, I can be found on the investors and media section of the company's website.
I'd like to remind you that we're making forward looking statements relating to the timing enrollment results of our clinical studies.
Regulatory approval, the promising potential impact of any of our microbiome therapeutics. This efficiency of our cash and cash equivalents to fund operations and the ability of additional cash resources.
Actual results may differ materially.
Additionally, these statements are subject to certain risks and uncertainties, which are discussed some of the risk factor section of our recent SEC filings.
Any forward looking statements made on todays 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 torn by Eric shop, serious President CEO, and Dr., Matt and Chief Scientific officer, and with that I'll pass the call to Eric.
Thanks, Carlo and good morning, everyone.
29 team in the beginning of 2020 had been a period of substantial R&D in corporate progress for series.
Our major accomplishments include.
Appointment of New company leadership.
Prioritization of our pipeline.
Initiation of the news there are two these seven instead or for a one clinical studies.
A collaboration with Astrazeneca in immuno oncology.
Initiation of fear free a one clinical development activities.
Dan activity to substantially strengthen stories balance sheet and provide sufficient runway to reap series critical 2020 late stage readout.
With these efforts the company is now set up for an eventful and data rich 2020, including two late stage clinical readout.
When success, we expect that 2020 will be a transformative year for the company and this is a year that could provide clear validation for the emerging microbiome therapeutic field more generally.
I'll start with an update on our late stage programs, beginning with EUR 109.
Sure I'm wondering nine is an orally administered drug candidate designed to restructure the microbiome to increase the diversity of commences microbes in patients with recurrent c. difficile infection.
Sure wondering what's design based on reversed translational and preclinical insights that indicated that the microbiome of patients with C. difficile disease is depleted in specific from acute spore forming bacteria.
Preclinical and clinical studies confirm that treatment with sort of one or nine cannon rich for these depleted bacteria and more broadly the restructure the microbiome to increase the diversity of couple of comments on microbes.
Our sort of wondering I mean affection process, fractionator, and purifies bacterial spores and inactivates vegetative bacteria and potential pathogens.
This includes pathogens, which have been linked to FMT associated disease transmission.
We believe that the center one nine manufacturing process, which is unique this series provides a critically important safety advantage to our products.
Based on several 109 clinical microbiology data.
This candidate has obtained both breakthrough therapy and orphan drug designations from the FDA.
Sure and one of the nine is now being evaluated in a randomized placebo controlled phase three study known as eco sports three in 188 subjects with recurrent c. diff infection.
All eco spore three study subjects are treated with standard of care antibiotics to address the qualifying C. diff infection and subjects are then randomized one to one to receive either <unk> or placebo.
We have been steadfast in our commitment to completing a rigorous so you're one of them nine phase three study in a well defined patient population and using an objective endpoint.
All patients enrolled at equal sport free are required to test positive for C. diff side of toxin.
We have taken this rigorous step which is unusual in the field to ensure that we obtained high quality data by enrolling only patients with an active c. diff infection and not those who are simply carriers of the c. diff bacterium.
Notably.
<unk> several prominent infectious disease treatment guidelines have recently been modified to recommend the use of toxin testing for C. diff infection.
While the stringency of our study has made enrollment more challenging.
We feel that the steps we've taken are essential to generating valid interpretable study results.
The eco spore three primary endpoint compares the c. diff recurrence rate and subjects, who received or one nine versus placebo and up to eight weeks after dosing.
In the study, we're hoping to observe a statistically significant and clinically meaningful therapeutic benefit in patients who received tier one or not.
I'm pleased to report that's equal sport free is now over 95% enrolled.
We eagerly look forward to obtaining center one instead to result in the middle of this year.
Based on our prior discussions with the FDA.
We believe that with clinically meaningful results. This single pivotal study may support product registration.
However, this would depend on the strength of the data and additional safety data may be required.
If successful.
Sure I'm wondering I could represent a major breakthrough for patients suffering from recurrent c. diff infection.
The disease is the leading cause of hospital acquired infection in the U.S. and is responsible for the death of approximately 29000 Americans each year.
Better treatments for C., diff infection or urgently needed.
The limitation of current approaches are highlighted.
Published case reports of drug resistant E. coli bacteremia transmitted by FMT, including a case that led to a patient death reported this past summer.
We were excited by the potential for sort of want to nine and we're eagerly looking forward to our study readout in the coming month.
Let me now turn to RCR to 87 program, which is in a potentially pivotal phase Twob study in patients with mild to moderate active ulcerative colitis.
There are 27 is an orally administered biologically derived live drug candidate.
Prior to commencing bacterial spores derived from the healthy human gastrointestinal tract.
Our objective was there too we do seven is to develop a first in class microbiome therapeutic that modulates, the microbiome and micro but still see that metabolites and you see patients.
There are 287 is intended to reduce the impact of a dysfunctional microbiome as a trigger and amplifier of inflammation.
Moreover, we believe that SER 207 may provide a much needed non immunosuppressive treatment option for this serious disease.
Our security seven phase one be proof of concept study demonstrated a statistically significant difference in the clinical remission rate between patients treated with vancomycin, followed by SER 207, or eight weeks compared to the placebo group.
In that study.
We observed a 40% remission rate, what's your 27 versus zero percent with placebo.
We have also obtained additional support them microbiome metabolite and transcriptome datasets that bolstered the observed clinical therapeutic activity.
Clear changes in both bacterial species and metabolites were found to be associated with SER 207 administration and clinical remission.
Furthermore, the safety profile for SER 207 was highly favorable.
Supported by the success of the phase one be study.
We are now running a fair to lease seven fees to be induction study termed eco reset.
Based on feedback from the FDA.
We expect that eco lease that could support registration as one of two pivotal studies.
The security seven Eco reset study is a randomized placebo controlled three arm induction trial designed to enroll 201 patients with active mild to moderate ulcerative colitis, who have failed prior therapy.
In our may patients receive a short course, the vancomycin pre treatment.
Followed by 10 weeks of the same daily regimen.
Used in the arm of the phase one be trial that show the highest clinical remission rate.
In RMB patients receiving them I assume pretreatment, followed by two weeks of the SER 207 daily regimen as in the first arm followed by eight weeks of a lower dose.
You know arm C patients received placebo.
We continue to move forward with eco reset patient recruitment and we're very much looking forward to having topline data in the second half of this year.
I'd like to now pass the call over to Matt to discuss our next generation development can that sort of 301 in our immuno oncology programs.
Thanks, Eric.
I'll begin with your through on our next generation rationally designed live microbiome therapeutic candidate for the treatment of ulcerative colitis.
C. A one was designed using our in human reversed translational drug discovery and development platform.
Series has established deep expertise in state of the our competition will culturing screening and manufacturing platforms that utilize insights from our human clinical data to inform the design of our therapeutic candidates.
We believe that our next generation drugs like Seer Threea. One may provide important benefits that include optimization of microbiome therapeutic candidates pharmacological properties.
Excuse me for a targeted diseases and streamlined drug product manufacturing.
We are finalized design of Seer Threeo, one and nominated the candidate that incorporate specific defined commences bacterial species.
The consortia bacteria in seer, three or one are designed to modify the microbiology and microbiome associate at metabolites in the gastrointestinal tract to favorably impact you see relevant anti inflammatory and immune pathways and to improve epithelial barrier integrity.
The design of Seer through one incorporates insights on microbiome, biomarkers and microbial media it functional pathways associated with clinical remission and endoscopic improvement from our seer to 87 phase one be study.
Our cdthree on one consortia has demonstrated that capacity to modulate disease relevant cellular mechanisms in human cell based screening assays and in in vivo model.
In addition, the tier three one bacterial species have been confirmed to end graft in humans.
Seer through one is manufactured in series in House GMP facility, and we recently initiated seer three or one clinical development activities to evaluate safety and drug activity in ulcerative colitis patients. This study will be run in Australia, and New Zealand and pending regulatory approval, we expect to start dosing patients.
Later this year.
We have selected these countries for our C or three a one study based on substantial physician interest in microbiome therapeutic approaches and to minimize recruitment competition with our ongoing seer to 87 study.
Moving now to see or for a one in oncology focused work.
Before one is an orally administrated administered biologically derived live microbiome therapeutic candidate comprising bacteria that reflect the gastrointestinal microbiome bacterial signature associated with response to checkpoint inhibitor therapies.
In collaboration with the Parker Institute for cancer, Immunotherapy, and MD Anderson Cancer Center, we continue to enroll a randomized placebo controlled phase one be study in 30 subjects with metastatic melanoma.
All patients receive Nivolumab and FDA approved anti PD one therapy.
And our randomized at a two to one ratio to either steer for one or placebo.
The study will evaluate safety clinical response and various potential biomarkers of response, including Microbiomes signatures of response, we will specifically examine tumor biopsies to evaluate immunological activity and other potential pharmaco dynamic Biomarkers, we expect to report preliminary for a one phase one be.
Study results in the second half of this year.
We also continue to make progress with our Astrazeneca immuno oncology related research collaboration the research work combined series Microbiomes drug discovery and manufacturing expertise that astrazenecas extensive oncology experience to further understanding of the potential the microbiome therapies to improve checkpoint inhibitor clinical where spot.
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We expect the collaboration to extend our understanding of the promise of Microbiomes therapies as a new therapeutic approach for cancer.
In addition, disagreement provide series with 20 million in financial support two thirds of which have already been obtain and Astrazeneca also reimburses all research activities related to the collaboration.
I'll now pass the call back there.
Thanks, Matt.
Turning now to an overview of the financials.
Series reported a net loss of 70.3 million for the fourth quarter of 2019.
As compared to a net loss of 98.9 million for the same period in 2018.
The reduction in our 2019 corporate spend is the result of the refocusing efforts implemented early last year.
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.
[noise] series ended the fourth quarter with approximately 94.8 million in cash and cash equivalents, an increase sequentially from the 83.8 million that we reported for the end of the third quarter.
Our fourth quarter cash position included the second of three $6.7 million payments from Astrazeneca related to our ongoing immuno oncology agreements.
As well as the first tranche of 25 million that were we received upon the closing of our previously announced debt agreement.
The company's cash resources are expected to fund operating expenses and capital expenditure acquirements, excluding net cash flows from future business development activities or potential incoming milestone payments into the second quarter of 20 to 21.
This cash runway does not include a $10 million tier three to one phase one associated milestone payment.
That series would be entitled to as part of our Nestle Health Science collaboration.
Before opening up the call to your questions I will mention that we have decided to make a change to our chief Medical officer position.
Evan Oregon series prior CMO is no longer with the company and we wish him the best on his future endeavors.
As we discussed today series is entering an eventful period with late stage clinical readouts and important regulatory interactions.
We are fortunate to have a strong clinical team in place today with experienced medical clinical operations and regulatory professionals that are effectively executing on our ongoing development programs.
Search is underway for a CMO, who who will provide expert leadership and we have been in dialogue with several strong candidates to date.
Operator, let's open the line up for questions.
Ladies and gentlemen US your line is asked a question you'll need to Questar Star then one key on you touched on telephone to withdraw your question pressed upon key please standby, while the compiled a county roster.
My first question coming from the line.
Chris Tony with Cowen Your line is felt.
Okay.
Hi, guys. This is Dan Behrendt answer Chris Thanks to the update we have a few questions first can you provide some thoughts and what investors should expect in terms of at least format.
Before the year window nine data first release will you just mentioned whether positive or negative will you provide numbers do you expect a press release and that call any help you can provide there would be great.
Yeah, Pam Thanks for the question, we have a certain number of of.
Precedent as it relates to disclose on topline clinical data I think that it's likely that we would follow those precedence I think you would get a a reasonably robust set of clinical endpoints.
Not just whether it was positive or negative I would point out that it is unlikely that we would have the support of microbiome analysis alongside the topline clinical analysis because of a blending a constraint of course, but but we will be working to have both sets of data as quickly as possible.
Got it and maybe a question about tier.
Since we're hearing more about that are you actually playing to begin.
Dosing patients. This half this quarter can you provide timelines there.
Yeah, Pam we haven't provided specificity, except that we have begun clinical.
We've initiated clinical operations I will say that.
We're really excited about moving forward into this program I think that 301 is illustrative of some of the benefit or the synergy that we have between our biologically source platform and our synthetic platform built the learnings that we've taken from our one be study for two to seven have been specifically applied to the design.
In the manufacturer of our three a one program and.
We're excited about that I certainly we do expect for station in in 2020.
Later this year, we haven't guided with more specificity than that but maybe I can ask Matt just to comment on on where we are thrilled one and some of the reasons why we're excited about the program.
Hi, This is a very exciting program, where I feel we've been able to a very effectively leverage our in human clinical insights from seer to 87 and design on the candidate.
We've been able to optimize for a very specific set of pharmacological properties, which include improving epithelial barrier integrity.
As as well as modulating various different innate and adaptive immune pathways that we have identified is important in response of the microbiome therapeutic too.
In the context of you see disease in as Eric noted, we're we're moving rapidly into the clinic.
Got it thank you very much.
Thanks for the question Pam.
Our next question coming from the line of Terence Flynn with Goldman Sachs. Your line is open.
Hi, this is missy.
Thank you Karen. Thank you for taking my question Fair situation, and then would you remind us if the powering up the seems to be child and I'm. Your second part that control I missed that study.
Yeah, obviously to answer the question we have not provided.
Specific guidance in terms of the power and I will say that we were highly encouraged with the one be results in the signals of efficacy in the safety that we saw and we're looking to replicate those results in a in a significantly larger study Oh, you know approximately 200 subjects.
And we're really excited about moving forward. This study, we think that Theres a tremendous opportunity in this space.
Based on the commercial opportunity based on the unmet medical need and by that we mean, both the efficacy.
As well as the safety as you know a number of agents that are on the market today or are in development can carry meaningful side effects, including immunosuppression and we think that the the solution was there to really seven could meaningfully address those.
Those those are those dimensions I'll remind you that weve received feedback from the F.D. that.
This study could be one of two pivotal studies and ER and we're really excited about moving forward.
We're in execution mode in terms of enrollment I'm very pleased that our February was our largest month to date in terms of enrollment. So we look forward to receiving those topline results from the second half of this year.
Yes.
Our next question coming from the line.
With Oppenheimer. Your line is open.
Hey, good morning, guys. Thanks for taking the question two quick ones.
From a loss.
Maybe you could just.
Let us know when your your next scheduled meeting with the FDA.
Seasonal requirements for Sarah I would be and what do you have any kind of in vision for a potential confirmatory trial is echo sport three is sufficient to to file a delay and then I've got a follow up maybe directed at night and thanks.
Yeah, Mark Thanks for the question you know our expectation is that we would have an end of phase three meeting.
Following the topline results.
This year and as I'll remind you a this is a breakthrough designated program by the FDA. So.
We will be as as focused as diligence.
In making sure that we're getting this this therapy to patients as quickly as possible I think as you know I'm.
Some of the safety dimensions that have been highlighted recently, including the patient deaths that happened over the summer and and the FDA meeting that was convened in November as as maybe a consequence of that that patient death, just speak to the fact that there's a significant need in the space for a solution like what we're hoping to provide with 109 so.
We'll be moving aggressively to try to get in front of the FDA to get this to patients as quickly as possible.
You in the second question for Matt Mark.
Yeah, so Matt reflecting back to the last rationally defined.
All that so it's fair to six too I'm wondering if you could just comment on how your strain selection criteria.
Evolved overtime to improve your confidence or improve our confidence.
With Sarah three on one.
Yeah sure absolutely. So it's great great question Mark Thanks. So.
Primarily or one of the fundamental changes has been the inclusion of our various in human data sets that we have acquired over the years since the original design of up to six two and the launch of that into the clinic and we've actually been able to leverage our learnings from two six to a in the clinic, which was the first rationally designed composition to go into.
Human subjects and the dynamics that we saw there with respect to dose.
And key bacteria that in graft and how they engraft in various different patient populations and incorporating those data as well as our data from a tier 287 in terms of which genes and grafted in which subjects the timing of those dynamics, and specifically, which functional properties, where conveyed a given those different dynamics have all been incorporated into the design.
Seer three a one so we believe we have a robust composition.
That will achieve the pharmacological properties that we have designed it to do based on those in human learnings and of course have advanced our various.
In vivo and ex vivo screening assays, a human based sell assays that allow us to then confirmed that we have the functional properties of these strains in the composition itself in the last the last piece I'd add is on the manufacturing side. We've also continued to advance our manufacturing capabilities in house with respect to these composition since.
The design of up to six two in moving to six to into the clinic and those learnings have been incorporated into Threeo, one and have advanced manufacturing of that product as well.
Okay perfect. Thanks for taking the questions.
Our next question coming from the line John with Canaccord. Your line is open.
Hi, guys. Good morning, Thanks for taking my question Congrats on the progress.
Or nine.
I'm just curious.
How are you defining recurrence in the phase three equals four study I'm just wondering if.
Recurrence will be based solely on.
A positive feedback toxin test or if it would need to conclude.
As well.
Yeah, John Good morning, and thanks to the question it's both.
But I think one of the key learnings that we've taken from the phase two is that that symptomatic presentation is necessary, but insufficient and we feel strongly that if you're not using cytotoxic.
As an essay for both inclusion in the study in the first place as well as calling a recurrence.
And your it's possible that you may not have an interpreter will dataset and as a result of require inside of the talks and we have experienced a incremental headwinds to enrollment but at the at the same time, we feel strongly that there will be a return based on on the the additional time and resources that.
Taken to finish the study so.
We really do believe strongly that set of toxin will be.
A key differentiator in terms of.
Having the study, culminating in a clear interpretable dataset that were allowed to use to move forward to move forward.
Okay, great and I'm.
Just curious if you have any sense as to what the breakdown might look like.
Between patients that were treated with vancomycin or for tax the mine.
Fortunately ended the study just curious if you have any sense.
But it'll be about 50, 50, or whether you might get a little bit more one together.
Yeah, John I don't think we've provided that the that that level of specificity beforehand and.
It's possible that we might include some of that analysis as part of the topline result, or somebody analysis that was supportive, but but we have not done that today.
Okay, great. Thank you.
Thanks for the questions John.
And our next question coming from <unk>.
So with John Your line is open.
Hi, its full on the said churn. Thanks for taking my call just a quick check in question. Since you obviously had a lot of important data this year in the clinical path forward depends on the nature of the data in your conversations subsequently with regulators, but can you say anymore and you said in the past in terms of what good datasets might look like that would mean if.
Faster path to market.
And you see in C. Diff, and then secondly, and I'm really asking this question because others are asking me.
Can you comment on what aspects of your time lines, if any could be sensitive to pandemic concerns or an outright pandemic. I know you did say recruitment in February was really good but any color would be appreciated.
Yeah. So bullet thanks for the question, maybe I'll start with the second one first since its certainly on everybody's mind.
You know what I'll say is that where we're taking precautions like any other company.
In response to to the Corona virus.
We don't have Oh.
Business operations in some of the countries, which had been and maybe at the leading end of this whether it's China or Italy or others.
We feel very good about our clinical supplies and our ability to execute.
Studies, but.
If you ask the now that you asked the question I think it's actually interesting as you think about safety as it relates to you know the microbiome approach and and.
If you think about are really all of our clinical studies, but in particular.
Our one of an IDE study based on on the transmission of the pathogen that happened over the summer the patient deaths.
We believe strongly that our approach is differentiated because we believe that donor selection is necessary, but insufficient for patient safety and that we have steps in our manufacturing process, which are intended to deactivate pathogens.
And maybe I can ask Matt to comment on that and then we'll come back to your second question.
Sure. So sorry, there Eric said, our products year, one or nine undergoes a rigorous manufacturing process, which isolates. The the specific bacterial spores that we have identified as depleted in patients with C. difficile, This biosys and that manufacturing process in activates pathogens.
And including pathogens, such as Corona virus, and we actually have clearance data from the early days of the program that demonstrate the clearance of such such viruses.
Yeah, and then bullet on your and your first question just in terms of data sets I think I might have mentioned this before in the earlier culinary but.
No we do expect to present, a rigorous topline clinical results on one on two to seven a combined with the microbiome analyses that we think car.
Have been supportive and have correlated with the topline results in the past of course, there's a time lag between when we can begin doing that work before unblinding. The study so.
We do expect the clinical results to to leave but of course, the microbiome analysis as part of the picture as we think about.
The the moving towards late stage and commercial for one on an intuitive seven but really also for learning as we move forward in this new space.
So and just lastly, I would say.
We are looking for a clinically significant statistically significant results.
In both of these studies that that will be the benchmarks that we look at.
Great. Thanks.
I'm not showing any further questions.
The call back management for closing remarks.
Thank you operator. Thank you for your continued interest in serious therapeutics I do want to mention in closing that we will be presenting at the Cowen Conference later today, and we look forward to meeting investors that the events have a great day and have a great week, thanks very much.
Ladies and gentlemen teleconference for today. Thank you for your participation you may all disconnect good day.
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