Q1 2022 Seres Therapeutics Inc Earnings Call
Welcome to the series Therapeutics first quarter 2022 financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after today's presentation.
There will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Doctor Carlo Tanzi.
Head of Investor Relations. Please go ahead.
Thank you Emily and good morning, our press release with the company's first quarter 2022 financial results and a business update became available at seven a M. Eastern time. This morning and can be found on the investors in the new section of the company's website I'd like to remind you that we will be making forward looking statements, including the potential approval of shear went on.
And its status as a first in class therapeutic.
Nobody BLA filing and potential product launch the market for SER 109, our development opportunities and the ultimate safety and efficacy data for our products actual results may differ materially.
These subjects the 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 update.
These statements in the future, but we disclaim any obligation to do so on today's call with prepared remarks, I'll be joined by Eric Shaff, President and Chief Executive Officer, Dr lease up on bulky Chief Medical Officer, Dr. Matthew can chief Scientific officer.
David Archuleta, Chief Financial Officer during the Q&A portion of the call. We will also be joined by Dr. Terry Young Chief commercial and strategy Officer and Dr. David Icke, Chief Technology Officer, and with that I'll pass the call to air.
Thank you Carlo and good morning, everyone.
We entered 2020 too excited about the opportunity for CRE used to bring the first microbiome therapeutics to patients.
Throughout the first quarter and in recent weeks series continued to make steady progress across our microbiome therapeutics pipeline.
The center of these advances as our lead SER 109 program, where we expect to complete the BLA filing in the middle of this year in support of a potential commercial launch in the first half of next year.
We believe that SER 109 has the potential to become the first ever FDA approved microbiome therapeutics.
Mark for this emerging class of medicines.
SER 109, FDA approval, we believe we have the opportunity to fundamentally transform the treatment of recurrent C diff infection and potentially provide patients with a far superior treatment option that is available today.
You will recall, our phase III SER 109 results demonstrated a dramatic reduction in the proportion of recurrent C. Diff patients experiencing a further occurrence demonstrated clear superiority versus antibiotics alone.
Phase III data surpassed statistical thresholds communicated by the F D a.
And we expect the single clinical study to fulfill efficacy requirements supporting our BLA filing.
The FDA also communicated that our BLA filings should include a safety database of at least 300 subjects, receiving with phase III dose and with a 24 week follow up.
SER 109 open label study is nearing completion and we are looking forward to meaningful clinical results. Later this quarter because results will include both safety and efficacy data across a broad group of recurrent CDI patients.
As we prepare for it sure one or nine BLA filing. We are also continuing to administer SER 109 via an expanded access program.
This program enables eligible adults, where there are currency different section and including those where the first recurrence to obtain access to SER 109 ahead of a potential FDA product approval.
The approval and launch it SER 109 would represent a significant advance for patients living with recurrent CDI for series and for the microbiome field more generally we are making excellent progress preparing for a successful commercial launch, which we're expecting in the first half of 2023.
Our organization working closely with our collaborator Indian Therapeutics, and Nestle Health Science company.
Continues to focus on commercial preparedness activities, including our market education efforts directed towards payers and health care practitioners.
Further we advance this work the more encouraged we are about the opportunity to transform the recurrent CDI market.
And the potential to help patients with SER 109.
This opportunity is significant with approximately 170000 cases of recurrent CDI in the U S per year.
Lee C. D. IRA resulted in over 20000 deaths per year and recurrent CDI patients do not have adequate treatment options available today.
Patients are being treated with regimens and procedures that are not FDA approved including us.
Microbiota transplantation and extended courses of antibiotics.
The latter of which can exacerbate harm to the microbiome.
In addition, overuse of antibiotics is a driver of antibiotic resistance, a global public health threat.
Pending approval, we expect that SER 109 has the potential to address the entire recurrent CDI patient groups suffering from this disease.
We believe that SER 109 represents a substantial commercial opportunity for series.
As we have previously shared the annual cost of a patient with recurrent C. Diff has been estimated to result in approximately $34000 in annual direct health care expenses and this does not include the substantial indirect costs associated with this disease.
We believe that with a highly attractive SER 109 profile and a tremendous level of unmet need this could translate into significant value for patients payers and for the company.
Based on our discussions with health care practitioners, there isn't an eagerness for new safe effective and FDA approved treatment options.
We believe SER 109 could provide an important new therapeutic option for recurrent C diff infection and.
And we are working with urgency to bring our therapeutic candidate forward to the market as quickly as possible.
In anticipation of launch we are also making progress expanding our commercial scale production of SER 109 to prepare for anticipated market demand.
Last year, we announced the collaboration with back Sara a global leader in biopharmaceutical product manufacturing.
This agreement increases our longer term sooner wanting that product supply, which adds to our existing manufacturing capabilities.
There is building a dedicated facility for commercial manufacturing and its new Microbiome Center of excellence, a manufacturing site dedicated to the production of lives biotherapeutic products.
We believe that our efforts to pioneer the manufacture and scale up of our microbiome therapeutics have further strengthened our leadership position.
Beyond the clear benefit that was observed in the SER 109 phase III study.
Also believes that our data provide improve important proof of concept for the potential for microbiome therapeutics and infection protection more broadly.
Activity will infections remain a major health problem, causing significant morbidity and mortality and several medically vulnerable populations and we believe that an infection protection represents a tremendous strategic opportunity for series.
Earlier this year, we held an investor event, where we detailed our infection protection strategy.
We continue to make progress on this front with SER 155, as well as additional preclinical stage programs and we look forward to providing progress updates.
And I'd like to now pass the call over to Lisa to discuss our clinical initiatives in more detail.
Thanks, Eric.
I'll begin with our SER 109 open label study.
This fully enrolled study includes over 260 individuals with recurrent CDI, who has been administered SER 109.
The study enrolled patients with a clinical profile consistent with her commonly evaluated diagnosed and treated in clinical practice, including over 25% of enrolled subjects when that first recurrent CDI.
Furthermore, the study allowed for initial CVI diagnosis can be made with either toxin or P. C are reflecting the variability and local medical practices.
However, we continue to use confirmatory toxin testing and also expected recurrences to ensure data quality and trial rigor.
We anticipate the pending data well reaffirm the highly favorable safety profile observed in our phase III study.
In addition, we expect to obtain supportive efficacy results in this open label study, including and individuals who are experienced only a first recurrence of disease.
We look forward to reporting steer one O nine open label study results later this quarter.
We also made progress preparing for as tier one O nine BLA filing I am pleased to announce that we recently received feedback from the FDA or the agency agreed with our proposed rolling BLA submission plan.
Our interactions with the FDA continued to be constructive and we expect to begin the BLA filing process in the coming weeks.
We anticipate filing completion for the full BLA package, including the required 24 week safety database in mid 2022.
I'll remind you that SER 109 has obtained breakthrough therapy designation and as a result, we expect to receive priority review with the FDA.
This would result in an expedited review timeline, including a two months BLA acceptance period, followed by a six month review period.
We therefore anticipate an approval decision in the first half of 'twenty two 'twenty three.
I'll now pass the call to Matt.
Thank you Lisa and good morning beyond tier one of nine our most advanced program and infection protection as tier 155, which we are developing for individuals' preceding allogeneic stem cell transplant. This program represents an additional clinical effort targeting gastrointestinal seated infections.
The patients targeted tier 155, alright, very high risk of serious infections as well as graft versus host disease, and we believe that SER 155 has the potential to address both issues were.
We are currently conducting a phase one b trial to assess safety and graphics of bacteria in SER 155, and efficacy of SER 155, alongside our partners at Memorial Sloan Kettering and the University of Chicago.
The subjects in this study will be undergoing treatment for <unk>.
[laughter] Metalogic malignancies, such as leukemia based.
Based on historical data, we expect that over 50% of these patients will experience infection or graft versus host disease.
Tier 155 is able to reduce the incidence of either of these conditions. We believe we would meaningfully improve health outcomes for these patients.
The study is designed with two cohorts. The first open label cohort, including 10 subjects is designed to assess safety and then grafting of bacteria in SER 155.
We are pleased to announce that the SER 155 data and safety monitoring Committee recently met as part of a planned data review and after evaluating preliminary safety data recommended continuation with cohort one enrollment.
This provides important support for a likely favorable safety profile of our novel Therapeutics immuno compromised patient populations.
Following that first cohort, we plan to enroll a second cohort, including 60 patients in a randomized double blind it designed to further evaluate safety and graphics as well as efficacy.
Efficacy will be measured by assessing the rates the bloodstream infections and graft versus host disease. Ideally, we would see reduced incidence of bloodstream infections <unk> acute gvhd associated with tier 155 administration.
The study will help inform future clinical efforts and in which outcomes, we should target with future studies.
Furthermore, positive results in preventing graft versus host disease would support not only preparing this outcome in future trials exploring next steps forward in our immune modulation pipeline more broadly.
Notably the study is designed to capture a rich dataset of translational biomarkers the reassessment of host immune modulation.
Looking ahead to pipeline expansion, we have a talented R&D team and an advanced research engine in place and as we highlighted in our Investor event in January we believe that both our clinical and preclinical data provides strong evidence supporting the potential for microbiome therapeutics and infection protection we.
We see the promise to reduce the abundance of targeted pathogens to decrease the potential for patient to patient packaging transmission strengthen epithelia, a barrier to further reduce the likelihood of bloodstream infections and further to modulate immune responses to tackle medical complications such as graft versus host disease.
Beyond tier 155 is also initiated additional clinical programs targeting infection. These include evaluating opportunities to combat infections in patients receiving autologous H S. E T and we are designing bacterial consortium to deploy in settings, such as cancer neutropenia, and solid organ transplant as well as <unk>.
Batting the slow pandemic have anti microbial resistant infections more broadly.
<unk> is a significant public health threat, and we believe microbiome therapeutics can be a transformative technologies to address this challenge we are driving towards initiating an additional clinical development program in 2023, and forgets progressing additional programs into the clinic.
Next few years.
I'll close by mentioning our ongoing work in Ulster quite as available data from our prior development efforts suggests that there may be an opportunity to utilize a biomarker based patient selection stratification for future studies in this indication.
We continue to conduct research activities to inform potential further development activities and we intend to provide further updates as we refine our future development plans in IBD.
With that I'll now turn the call to David to provide an overview of our financials.
Thanks, Matt the details of our quarterly financials are included in the press release issued this morning series.
Series ended the first quarter of 2022 with approximately $248 million in cash cash equivalents and marketable securities. This compares with a cash position of $291 million at the end of 2021.
With respect to our operating expenses and efforts over the near term we continue to be focused on a number of critical SER 109 related activities, which include preparing and filing the BLA submission continuing to ramp up manufacturing operations for commercial supply, including expanding our longer term tier one or nine products.
<unk> through our back their collaboration.
And in conjunction with Amy and continuing and accelerating launch readiness activities.
In addition, we continue to invest to advance and expand our pipeline with a focus on infection protection opportunities and further build upon and enhance our platforms and capabilities.
As a result of these high priority and value generating activities.
We expect our expenses to increase in the coming quarters as we approach a potential commercial launch, but at a moderating rate of growth as we have already expanded our capabilities across much of the organization.
In summary, the company is well resource to prepare for SER 109, commercialization drive our ongoing development and preclinical programs. While also deploying resources to continue to advance our research platforms, where we believe we have differentiated proprietary and sustainable advantages.
Now I'll turn the call back there.
Thank you David.
Even exciting year ahead, as we continue to mature from an R&D focused organization to a commercial entity.
This process is already underway and we have several key inflection points along this pathway, including near term sort of what are now an open label study data.
The filing of our complete BLA submission.
Assignment to the timely producer date, given our breakthrough therapy status.
And continued progress with our prelaunch activities alongside Amy.
In tandem we remained.
Focused on advancing the other important infection protection programs in our pipeline.
In addition, our R&D engine continues to evaluate other opportunities for our core technologies as Matt discussed that we'll maintain our microbiome leadership position.
We look forward to keeping you appraised of our progress in the months ahead.
With that now operator, we'll open up the call to questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your headset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
The first question comes from Mark.
Sending batch from Oppenheimer. Please go ahead.
Hey, good morning, guys. Thanks for taking the questions.
Kind of a couple.
All related to the open label extension trial.
First and foremost you mentioned that the FDA is looking for a 300 patient safety database and then I think we just had 260 patients were treated with SER 109, and the open label extension.
Maybe just comment on the discrepancy.
Close enough to 300.
And the second question is whether the results are gonna be stratified by diagnosis methodology PCR versus toxin test to confirmed C. Difficile.
And then maybe one final part of the question.
It is on the 25% of patients who had a single a recurrent C diff versus multiply recurrent C. Diff is that enough of a population to potentially support a label. That's inclusive of first time recurrent so kind of a kind of a three part question, but thanks for thanks for color.
Any way you can.
Mark Good morning, and thanks for the questions and I appreciate the first one so so let me take that one and clear up any confusion in the I'll ask Lisa to take the next two but.
Let me just provide a little bit of context history. So as a reminder, when we have the phase III readout with with what was outstanding results.
We announced then that the FDA has set a bar a statistical threshold for us number.
One single pivotal study, we not only met that bar, but we far exceeded it right.
However, the FDA was looking for at least 300 subjects on what was the successful phase III dose at the time, we had I think the number was 105, Lisa can correct me if that's wrong, but we had roughly a third of the of those 300 subjects that were either in the active arm of the phase III or a handful of subjects that had rolled over from there.
From the first into the into our open label study. So we've had roughly a third and basically what we did is we designed the open label study two to fulfill the residual to fulfill that that two thirds or roughly 200 subjects.
That the FDA was looking for to support BLA from a safety perspective, so that was the basis of the of fulfilling that safety database that has been the the kind of critical path item for us on on submitting the BLA. We were really pleased with the momentum that we saw in enrollment throughout the course of the open label, which we think.
Is suggestive of the fact, you know and this is even before the the New England Journal article came out of the fact that the profile of the drug is really getting out there. So hopefully that answers the question of the 300.
With the 100 that was in the phase III plus the $2 60 that is added from the open label, we were well in advance we think of the at least 300 that the FDA was looking for.
And then maybe I can ask Lisa talk about stratify by methodology and then you know our thoughts on the first occurrence and how the agency might look at that.
Yeah, there it really isn't a process of stratification since we did the patients who are being randomized.
But we'll be able to look at PCR versus toxin that it's I think it's worth saying that a lot of these things are actually algorithm. So P. C. R plus a D D H or toxin plus a G D. H M. So it's not as simple as just that but this is just how ah patient.
Our diagnostics are diagnosed in the community. So and then with regard to your question on the 25% I think it's important to remember that we've always said that one very important.
Factor in obtaining a broader label is the pathophysiology of the disease and my guidance you can see that the agency has the ability and does take that that opportunity to.
Broaden our label based on pathophysiology of the disease compared to an expected outcome compared to how the trial was specifically run so I think that 25%.
All of the data in <unk> three will be something that they'll look at I think it's gonna be a very interesting and supportive data.
But I think it's gonna be a couple of factors and again as I, primarily said the fact that the field really see C diff as primary versus everything else.
Once you get into the first recurrence I mean, the reason your recurring is you've got a microbiome injury and you can look back at some of the yeah papers in the field and you can see vanco rate of recurrence.
It really into the 30% so it's already a problem at first recurring.
Got it okay. Thanks, so much for clarifying Super helpful Sure.
Thanks for the question Mark.
Yeah.
Operator, we'll take the next question.
Okay.
I think we've got quite we seek questions in the queue. So we're just.
Waiting for.
<unk> for the questions to be let through.
I apologize for the disturbance I am back on them. Our next question comes from Peyton both Sac from Cowen. Please go ahead.
Hey, Good morning, guys. This is patent on for Joe and Thanks for taking my questions. Maybe just to follow up on the question that was asked earlier is there a specific group of patients that you would think would be like early adopters of the therapy.
And then kind of with your medical Affairs feedback do you believe that patients would use this in first line or do you expect it to change over time.
To get more comfortable with the therapy.
I have a follow up thank you.
Taken could you ask the first question again I didn't hear there are a group of patients.
Could you just.
Repeat that please.
Oh, yes, sure I'm, sorry is there a specific group of patients that you would be early adopters of the therapy.
And then early adopt maybe.
Yeah.
Yes.
Yes.
Yeah, maybe I can start and then ask Lisa or Terry to comment, but I think Lisa just answered in the prior question that.
The field looks at primary recurrence primary.
C Diff and then referenced this and.
We feel strongly that.
SER 109, given the profile of the safety and efficacy as appropriate for for all recurrent C diff patients.
I invite Lisa or Terry to comment further.
Yeah, No I I completely agree and then with regard to early adopters I'll turn it to Terry.
Sure I think it's important to understand kind of how this business operates for patients and physicians to really appreciate that question.
Patients describe this as a very acute frightening isolating and debilitating condition.
And thats upon the primary accounts.
First time it comes back.
Patient becomes very frustrated fearful they know they know that vancomycin or the antibiotic that they were administered didn't work the way that it's supposed to and they turn up in a physician's office with a very different in the air and they get the first time and the physician have a similar experience, it's a bit of Oh God the disease.
Back and physicians refer to it as taking eases the pain of their existence because it keeps coming back. This is the number one high unmet need in the category the prevention of recurrence and the number one unmet need despite availability of treatments today right and you can see what tier one of nine brings to the table.
Versus standard of care antibiotics, and our kids don't want results.
So we expect across the recurrent patient population that we would have adoption. We believe we can help all 170000 annual cases in the U S. Once approved.
Great. Thanks, Scott Thanks, Scott just some color on that.
Go ahead Ben.
So we've also seen some programs just kind of switching over to manufacturing really quick.
The programs, we keep a clinical hold after requirements for additional screening protocols for pathogen I'm kind of in your discussions with the FDA have have they mentioned or asked for anything for additional participants and even with that tier one of nine manufacturing.
Yes, maybe I can start and I'll ask.
David Icke who's with us to comment further.
We've said for a long time, maybe even before the phase III readout that we felt that our process was differentiated versus.
The others were taking.
We don't rely only on donor screening and we think that donor screening is inherently reactive you can screen for the things that you know about but.
You can scream from names that you don't know about which unfortunately, the last couple of years included Sars Cov, two and the FDA actually put out a warning.
March around the potential transmission of Sars cov two two so.
We do think that our process is differentiated and maybe I can ask Dave to comment further on.
On the question sure Thanks, Eric and thank you for the question David speaking.
T O M series and so the direct answer to your question is no. They didn't contact us about that however, because we have breakthrough we have been in ongoing conversations with the FDA over over the whole development cycle and we had previously shared with them, what what Eric alluded to both our donor screening paradigm as well as our.
Our manufacturing process details, whereby we inactivate pathogens.
Part of that process. So it's an inherent element of our process from the very beginning that safety is foundational to how we manufacture our products.
So we feel very confident as we move this BLA forward.
Awesome. Thank you very much.
Thanks for the question Peyton.
Okay.
Our next question comes from John Newman from Canaccord. Please go ahead.
Yeah.
Hi, guys. Good morning, and thanks very much for taking my questions.
Question on SER 155, what you're studying in a transplant wonder.
I Wonder if you could remind us.
What types of flexibility you have built into this study in terms of.
Testing different levels of dosing if if you can do that and then also.
Just curious what you hope to learn from this study upon completion.
We've seen some of the secondary endpoints or some of the typical things that people look at acute graft versus host disease.
I think you're also calling patients for survival, but just curious as to what you're most interested in learning about as you take this program forward beyond phase one.
Yes, John good morning, and thanks for the questions.
Really excited about 155 thrilled that youre asking about it.
Two questions dosing and then what are we hoping to learn and maybe I'll ask Lisa to comment first and then perhaps Matt on the scientific side of things.
Sure we haven't been very specific at all yet on dosing other than to say that.
We're dosing it in a very intentional way through the course of the transplant.
<unk>.
And with regard to what we're hoping.
Hoping to get from the study and it's important to remember that this is first and foremost a safety study. This is a very compromised patient population.
Great fragile, it's important for us to confirm what we expect that this will be I'd say therapy and those patients, but obviously, we want to see the data and we'll be looking at in Grasberg as well and then along with that we are going to be paying close attention to the <unk>.
<unk> of infection of any kind, whether it's a blood stream infections or localized infections Mitchell.
Mr opinion fever graft versus host and then there's a number of different endpoints.
We can look at if any of those hit that's a interesting signal for us and unfortunately for the patient the the the rate of some of these things is so high that even in a relatively small ish a phase one study and we expect that there'll be enough of a rate of occurrence.
That will be able to see a signal with its there.
Yeah.
John Thanks, Thanks for the thanks for the question and I think a couple of important additional points, which is one as a reminder, our drugs were designed to target multiple different therapeutic pathways and one thing that we find attractive about the 155 program is that given the unmet need in this population success, both in either reduce needs.
There's a bloodstream infections or reducing the incidence of graft versus host disease combined as well as independently would be would be would be meaningful.
Particular patients then of course, we designed this study to be very translation late rich as we often do because as you know we could play a reverse translational strategy and have a platform to really be able to leverage those insights that we get out of human datasets, combining that with learnings on the preclinical side.
Tools and capabilities, we have there to really understand how the microbes are specifically interacting with each other and as well as with with the with the host and so I think something that's very exciting about this program is the insights that we will get there in terms of both our ability to impact got seated infections and do so in a novel way.
As well as around the host immune modulation I think will be meaningful and I think the last point I'll make is again. This is a highly immunocompromised patient population. This is the sickest of the sick patients and we just had a DSM seat that gave us the green light to continue dosing patients and if that safety.
Profile is maintained I think it really opens up how we can think about deploying this transformative technology and other medically immuno compromised patient population. When you think about the number of patients that are compromised and what are the leasing leading causes medically of mortality in many of these patient populations are.
Sections that often I see that you can think about cancer neutropenia, you can think about cirrhosis, you can think about ICU patients huge opportunity.
Excellent Yeah, certainly an exciting programs thanks for the comments.
Thanks for the question John .
The next question comes from Chris Howerton from Jefferies. Please go ahead.
Great. Thanks for taking the questions much appreciated I think one question that I've been curious about is dead, obviously as we've seen different health care Utilizations over the course of the pandemic.
Wondering if there's any changes in the rates of recurrent C. Diff infections that we've been observing epidemiologically.
And if so you know would there be any expectations of lasting effects of that.
As a second question.
Just wanted to help understand what the capital needs of the company might be to develop the pipeline. Further obviously given the fact that you have a robust partnership for the C. Diff program. Thank you.
Chris Good morning, and thanks for the questions, maybe I'll ask Lisa to comment on the first.
And we are active in our Med affairs efforts.
I think we will provide some perspective on that and then maybe I can ask David to comment on on how we think about capital and especially those on the front end of the pipeline.
I think early on in the pandemic. There was some suggestion that perhaps rates were dropping as people were staying away from medical care in general and medical institutions.
But it's it is quickly back to normal both with regard to reports that we're seeing in terms of papers, but also just.
Physician feedback as people are returning to their more typical medical and counters.
David you want to comment on on the capital question, Yes sure. Thanks, Thanks, Chris So as we've discussed we ended the quarter with $248 million in cash.
Look we've got a lot of value generating opportunities ahead of us and in the near term.
And we are ensuring that we're investing appropriately to to achieve those for example, SER 109 approval, we receive a $125 million milestone payment from from Nestle. One SER 109 is approved then we are sharing the profits 50 50 with Nestle.
<unk> that provides future cash flow to us and we've got up to $225 million.
In sales related milestones and we believe those are very achievable. So we think we've got plenty of opportunities to to add to our balance sheet.
And continue to continue to grow and fund the company in that manner.
Yes, the only thing I'll add maybe the David's comment Christmas.
One is an interesting illustration for us where you're at.
Time, when we were really constrained as a company and resources with grit and creativity in partnership we were able to move that program forward to the point, where now we're in the clinic and.
No.
The capital requirements for some of these early stage investments.
Tend to be more efficient than the later stage our investments. So we do think there's an opportunity there to continue planting season.
And having them grow into what we think is an exciting opportunity and infection protection.
Yeah, No that's really helpful and maybe just as a <unk>.
Point of clarification, perhaps to you David would be as we anticipate an approval and commercial launch for SER 109 will there be any significant capital investments by series to support that launch where activities.
So we are sharing in the expenses.
And.
So there there is nothing really out of the ordinary other than sharing in the expenses as it relates to the commercialization of SER 109.
Yeah, I think maybe it's worth it might be worth just reminding.
The some of the parameters around the deal and $125 million approval and then just the 50 50 split yes. So so as I had mentioned 175 million upon approval.
Once once SER 109 is commercialized we are we are splitting the profits we are splitting the expenses 50 50.
We are responsible for manufacturing SER 109 that goes into the whole equation the cost sharing equation.
And as we've talked about before this transaction. This deal with Nestle is a tremendous way to leverage the capabilities that they bring to the table leverage our knowledge and our expertise and capabilities, but also I think it's it's financially very attractive and ensures that we are not in a position where we're having to make.
Mass of investments to to watch a product on our own. So we think this is tremendously efficient and effective.
Excellent I really appreciate the clarifications and thanks again for taking the question.
Thanks for the question.
Our next question comes from Chris Tony and Thats from Goldman Sachs. Please go ahead.
Good morning. This is CJ on for Chris Thanks for the updates this morning.
I wanted to ask a few more around sort of the regulatory and commercialization prep process for one of mine I know, we haven't seen this nearly as much as historically, but do you have any anticipation for the FDA, requiring an AD com for approval.
For the regulatory component and then on the commercialization side.
Can you provide any more details on the preparations that are ongoing and any feedback from your payer discussions to date or <unk>.
US your thoughts on kind of the expected size of your commercial piece of the organization.
Yeah, good morning, and thanks for the questions I'll start with.
The final question or maybe I'll I'll ask Luis to comment but.
The short answer is yes, we are we would expect that the and I tell them what will happen, but maybe at least can comment then loss Terry to comment on the commercial prep side, Yes, a novel therapy first in class and we absolutely are planning for an outcome.
And then Terry if you want to comment on the commercial prep question sure well. We obviously are scaled that is on the back of the receipt of the phase III data in 2020, but I'll pick up on a couple of areas, where we've really amplified our effort. This year one is around educating ACP. If we're doing a lot of work there.
To ensure that physicians understand the role that restoring function of microbiome place in preventing future recurrences of C. Diff and as I mentioned earlier, that's the number one unmet need in the category. So a lot of disease education and in fact, our disease education campaign just one.
The nationally prestigious me any award, but we were very excited about our best professional web campaigns and so on.
Quite proud of the team across theory, and Amy and for that we're on.
Also engaging broadly with our payer audience and this is a great example of one of the benefits of our co commercialization agreement with Nestle. The amine division is necessarily already had an existing pay your field team that is covering their in line products. So unable to deploy that field team.
Leon in the prelaunch process to educate payers around the disease, but also we're able to educate them about the robust profile, we're still on a high and we're hearing feedback from that engagement process with a field team that really mirrors. The early research we did with Payors and you may recall from previous discussions that we.
Search resulted in a very high clinical value ranging from payers and in the neighborhood of a somewhat recently approved and commercialized hepatitis C product. So what we're hearing great feedback from ACP, the broker slotted them payers a broader swath of them you asked about our commercial structure.
We'll be deploying a field team that Amy.
<unk>.
And he calls on gastroenterology today and that will be building upon that to cover the highest prescribing infectious disease physicians as well and obviously were building an in house commercial organization across our company.
Thanks for the question.
Okay. Thank you.
Our next question comes from Vernon Bernardino from HR or H C. Wainwright. Please go ahead.
Hi, everyone. Thanks for taking my question just wanted to get a little bit more detail you already alluded to the.
The milestone you would receive a with the BLA filing but.
You you did have some a collaboration.
Hum.
Revenue from related party in the first quarter, just wondering if you could perhaps describe a little bit.
What expectations other expectations, you may have as far as revenue.
From these collaborations.
Into 2023, thank you.
Sure, maybe maybe I'll ask David just to provide a reminder, on the structure of the deal with Nestle.
And maybe just a review on the on the milestone, which I think is pretty straightforward but.
Yes sure. Thank you so the related party revenue that you saw in the first quarter.
That relates to the two agreements we have with nationally that 2016 agreement we have with naturally that is for for C diff and ulcerative colitis.
Ex North America.
And it is the recognition of deferred revenue over time.
And then also in there is a small piece of deferred revenue related to our co commercialization agreement that we executed with Nestle.
In the middle of last year, we recognize that over time as well so that one and a half roughly one and a half million in revenue is the is the.
Addition of these two deferred revenue recognition.
That's jumped around just from an accounting standpoint.
In a range of $4 million to $5 million a quarter.
There is some variability just based on just based on the academy of that so that's going to continue.
Over the subsequent quarters and then as we bring in milestones and as we have as we have co comparisons co commercialization revenue once you want or nine as is approved we will have additional revenue.
And as a follow up that's related to the line item in your balance sheet as far as the deferred revenue.
Yes, and liability section yes.
Okay that has arrived for the clarification.
Thanks for the question Brian .
This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.
Okay.
Thank you operator, and thanks to everyone for tuning in this morning.
We're extremely excited about this next period in the company's evolution. We think that there are exciting milestones ahead, and we continue to get closer to fulfilling our mission of serving patients with microbiome therapeutics. So have a great week and we will be in touch soon thanks very much.
Yeah.
This conference has now concluded. Thank you for attending today's presentation you may now disconnect.